WASHINGTON – Senate Majority Leader Harry Reid, deferring to avid opposition by the banking lobby, last week agreed not to attach an increase in the member business loan limit for credit unions to a small business jobs package, known as the JOBS Act, which has strong bipartisan support and is predicted to pass.
The Senate’s retreat on the credit union provision comes as 1,100 bankers are scheduled to visit Capitol Hill this week during the American Bankers Association’s annual Government Relations Summit – at the same time 4,000 credit union executives and volunteers will be lobbying Congress during CUNA’s Government Affairs Conference.
The ABA began running a radio ad that urged Congressional opposition to the MBLs bill. The ad, recorded by association President Frank Keating, will air all week during drive time on WTOP, the most listened-to station in the Washington, D.C., metropolitan area.
The ad is part of an extensive, coordinated, grassroots campaign by ABA and the state associations to stop the legislation, which would more than double large credit unions’ business-lending authority.
Senate Leader Reid last week said he planned to hold a vote on the credit union bill – which would raise the cap on MBLs to 27% of assets from 12.25% – but it won’t be part of the JOBS bill, as had been planned. The retreat came after the ABA and Independent Community Bankers Association told Senate leaders they were ready to pull their much-needed support from the JOBS Act if the credit union provision were to be attached.
The bankers are telling Congress the bid to raise the MBL cap is being led by a small group of big credit unions, as few as 100, that now dominate the credit union movement. Keating asserted most credit unions have ample ways to avoid the limit because all loans under $50,000 are exempt. Also, he said NCUA can give a credit union a waiver from the limit and has granted a waiver to 130 credit unions for which business lending is an important part of their business.
“These exemptions mean that credit unions already have unlimited ability to fund small business loans, without the need to seek increases in their member business lending limits,” said the ABA’s Keating.
The proposed increase, said Keating, “is only directed at larger loans and would benefit only a few large, credit unions.” He said Call Report data shows just 96 credit unions out of a total 7,300 are within 80% percent of their congressionally mandated cap.
A similar bill to raise the MBL limit is pending in the House, where members apparently are waiting for the Senate to act first.
CUNA’s Chief Lobbyist Ryan Donovan saw Sen. Reid’s statements as a major boost to the credit union initiative, even if it was not added to the JOBS Act. “We are going to continue to build on the support for the MBL bill in the Senate and in the House,” said Donovan. “Senator Reid’s commitment to hold a vote on the bill means there is now a decision for Senators and Representatives to make – do they support additional lending for America’s small businesses or do they want to leave this money and the jobs they would create on the table?”
The bankers have been successful in fending off attempts to raise the MBL cap ever since they convinced Congress to enact the cap as part of HR 1151, the 1998 CU Membership Access Act. Before that there was no limit on how many MBLs a credit union could make.
