The continuing tirade by Camden Fine, president and CEO of the Independent Community Bankers of America, against the National Credit Union Administration's member business lending rule is filled with broad and sweeping misrepresentations to justify his group's baseless lawsuit.
Curiously, Fine omits a critical fact: Credit unions are lending to businesses that banks don't serve. This was true during the financial crisis and remains true today.
According to the 2015 Economic and CU Monitor released by the National Association of Federal Credit Unions, only 27.2% of bank business loans were under $1 million; that compares with 85.4% of credit union member business loans. Additionally, research by the Credit Union National Association shows that during the financial crisis, credit unions, in dramatic comparison to banks, increased small-business lending support by 121% as banks cut lending to that important market.
Yet credit unions are not an existential threat to banks. As a group, credit union market share of the small-business loans by depository institution is only 9% today. At midyear 2016, banks reported $689 billion in outstanding small-business loans, compared with just $64 billion for credit unions.
Unfortunately for small-business owners, credit unions are prevented from doing more to help them because of the existing 12.25% statutory cap on their small-business lending. Banks have no such cap, yet Fine would rather attack credit unions than help his members do more to serve their small-business customers.
ICBA waited more than 10 years to sue the NCUA over portions of its MBL rule, which was last modernized in 2003. That belies the notion that this suit has any merit; instead, this effort is a self-serving ploy to distract community bankers from the real issues that should be concerning them, namely the encroachment by large banks into the business of small banks and their resulting loss of market share.
With approximately 6,000 credit unions that represent more than 106 million Americans, the CUNA/League system and NAFCU are committed to protecting credit union interests in this case and their ability to provide critical capital to small businesses. The NCUA acted appropriately, within its legal authority, and followed all procedures when issuing the MBL rule. Despite all the ballyhooing from Fine, any claims to the contrary are simply without merit.
Dan Berger is the president and CEO of NAFCU. Jim Nussle is the president and CEO of CUNA.