WASHINGTON — In a victory for banks, the Senate's Democratic leadership has unexpectedly delayed consideration of a bill that would allow credit unions to expand their business lending.
The measure had been expected to come to a vote in the Senate as early as this month, and lobbyists from both the banking and credit union industries have been in the midst of furious efforts to wrangle votes.
But a spokesman for Democratic Sen. Charles Schumer told American Banker on Monday that the vote will not happen until at least the second half of the year.
Schumer, who is a member of the Senate Democratic leadership team and a co-sponsor of the credit union bill, initially revealed the delay Friday in a private meeting with the New York Bankers Association.
"The point that he made is that it's not likely coming up in the next several weeks, as in May or even June," Schumer spokesman Brian Fallon said.
Fallon cited a busy Senate schedule, including postal reform legislation and a cyber-security bill, in explaining the delay.
"The Senator acknowledged that the bill was not likely to come up in the immediate term because of the Senate's crowded agenda. But he continues to support the legislation and expects it will be voted on in the coming months," Fallon added in a follow-up email.
The bill, which is co-sponsored by Democratic Sen. Mark Udall and Republican Sen. Rand Paul, would raise the cap on business lending from 12.25% of a credit union's assets to 27.5%.
Credit unions say the legislation will make it easier for small businesses to get loans, which will create jobs, while banks argue that it will benefit only a relatively small number of non-profits while also adding risk to the credit union industry.
Trade groups on both sides of the bill said Monday that they will continue their vigorous advocacy, no matter what Schumer says about the timing of a vote.
"It's no time for the banking community to let their guard down, because the bill will come up," said Paul Merski, executive vice president and chief economist at the Independent Community Bankers of America. "So we're going to remain on the attack."
That sentiment was echoed by James Ballentine, executive vice president of congressional relations at the American Bankers Association. He noted that the credit union bill remains on the Senate calendar, ready to be called up at any time under a procedural move that allows the measure to bypass consideration by the Senate Banking Committee.
"When that procedure has been put in place, you have to act as if it could be called up at any time, and that's what we're acting on now," Ballentine said. "Maybe some would consider it paranoid. I consider it to be prepared."
John Magill, executive vice president of government affairs at the Credit Union National Association, downplayed the significance of Schumer's comments.
"It really doesn't change anything at all," Magill said. "We do know that a vote has been promised, and we look forward to that day - in the near future."
Bill Cheney, CUNA's president, also put a positive spin on what looked like a setback for his side.
"If the banks want to go to sleep on this legislation, that's fine with us," Cheney said in a written statement.
"The fact is, however, Senate leadership remains committed to a floor vote on this bill, a promise Sen. Schumer reiterated again today. Senators recognize our bill would create hundreds of thousands of jobs and inject billions of dollars into the economy - at no cost to taxpayers. Credit unions will continue to advocate for this bill with no letup. The bill remains on the Senate calendar, and we know that small business will continue to join us in the push for approval."
Last month, Senate Majority Leader Harry Reid promised the bill's supporters that he would schedule a vote, but he did not specify when the vote would occur. He also did not specify whether the bill will be voted on as a stand-alone measure, or as part of a larger legislative package.
"Senator Reid never said when or how. He just said we will have a vote," said Fred Becker, president of the National Association of Federal Credit Unions. "The bill remains on the calendar. And we take the good majority leader at his word."
Schumer's comments sparked speculation Monday that the Senate vote will be delayed until after the November election. The credit union bill will force many senators into a tough vote, requiring them to choose between community banks and credit unions, both of which are powerful constituencies.
Delaying the vote until after Election Day would allow incumbent senators who are up for reelection to avoid alienating either side until a time when the stakes are lower.
"The real issue is that the credit union bill is so controversial that no one wants to take a vote on it prior to the elections," said Merski, of the ICBA. "If it's bad for a vote prior to the election, it's bad for a vote after the election. And that will be our messaging."
Although the bill may still pass the Senate this year, any delay in its consideration benefits bankers. The congressional session ends around the end of the calendar year, so in order to become law, the bill would need to pass both the Senate and the House and be signed by the president by that time.
Credit unions have sounded optimistic about their chances of securing the 60 votes necessary to ensure passage in the Senate when the bill eventually comes up for a floor vote.
They likely face a tougher climb in the House, though, where the Republican leadership has not committed to a vote on the measure. If the legislation is attached to an unrelated bill that must pass Congress this year, however, that would improve its chances of becoming law.