TESTIMONY BRINGS MICA'S CUNA CAREER FULL CIRCLE
WASHINGTON-Dan Mica is ending his CUNA career in some ways as he began it almost 14 years ago-lobbying Congress against strict limits on the amounts of business loans credit unions can make.
Mica lobbied against the limits before they were added to HR 1151, the 1998 CU Membership Access Act, and has been working to reverse the limits ever since. He made one last pitch during a hearing last week before the House Financial Services Committee.
Mica, who is handing the reins of CUNA to California CU League President Bill Cheney in six weeks, told lawmakers that the bankers-the same group that convinced Congress to enact the member business loan limits as part of HR 1151-are the only ones standing in the way of raising the limits now. "'The banks oppose it,'" is not a good enough answer for them especially when that is the only answer available," Mica told the House panel. "There is no sound public policy reason not to allow credit unions with the demonstrated capacity to do so to increase their lending to small businesses."
During his tenure at CUNA Mica has often fought the banks, especially over the federal tax exemption for credit unions, but has just as frequently worked hand in hand with the bankers, on bankruptcy reform, against credit card and overdraft regulations, and most recently as the two groups fought amendments on interchange fees to the Senate's bank reform bill.
The credit union lobby prefers to have credit union managers testify at congressional hearings but CUNA decided to have Mica, a former four-term member of Congress, speak today in what may be his final Capitol Hill appearance as CUNA CEO.
The credit union lobbyist was testifying on a proposal to establish a $30-billion Small Business Lending Fund that would provide lending capital to community banks. Mica said increasing the current 12.25% (of assets) limit on credit union business loans would accomplish the same goals with no government outlay. "In contrast to the administration's $30 billion proposal, increasing the credit union member business lending cap could be done without cost to the taxpayers and without an increase to the size of government," said Mica.
MBL Cap Was Part Of HR 1151
The business loan limit was part of the price credit unions agreed to pay for passage of HR 1151, which ensured the ability to offer multiple group fields of membership that had been struck down by the U.S. Supreme Court as violating the Federal CU Act's requirement that credit unions have a single common bond.
Ever since then, credit unions have been trying to ease several provisions they were forced to accept, including minimum capital standards known as prompt corrective action, or PCA, and the business loan cap. Credit unions have succeeded in getting legislation introduced in each of the past three congresses to increase the limit, first in the 2005 bill known as CURIA, but have yet to get the higher limit passed by Congress.
Mica told lawmakers the credit union proposal has obtained critical support for the first time from the Treasury Department, which has endorsed a two-tiered system. Tier One credit unions would be eligible to increase their member business lending to 25% of assets. Tier Two credit unions, with the approval of NCUA, would be able to go even higher to 27.5% of assets. Those credit unions must be well-capitalized, show experience in business lending and be at or above 80% of the 25% cap for at least a year.
But the small business loan bill, which one lawmaker labeled "TARP with lipstick," is not expected to pass Congress this year, according to observers. The bill, called the Small Business Lending Fund, has little chance of passing the Senate, even if it makes it out of the House, according to one credit union lobbyist.
Still, the White House endorsement, coming from a high Treasury Department official, is a significant boost for credit unions that have been working for several years to ease the limit on MBLs. In testimony before the House Financial Services Committee, Gene Sperling, the counselor to the Treasury Secretary, said the department supports the credit union proposal to lift the current 12.25% of assets limit on MBLs to as high as 27%. "We do support a compromise expansion of the credit unions (MBL) program," said Sperling.
The Treasury endorsement, something that has been lacking in all previous efforts on MBLs, is critical to financial legislation like this because it means the Obama administration does not see it as a threat to credit unions.
At least one lawmaker chided the Treasury's Sperling for the exclusion of credit unions from the package. "I'm just surprised this wasn't part of the plan," said Rep. Bill Posey, R-Fla., who labeled the $30-billion program "TARP with lipstick."
Rep. Jeb Hensarling, the Texas Republicans who has emerged as one of the leaders of the minority on the Financial Services Committee, called the bill "TARP 3.0" and said it would do little to help the economy.
