One has to admire the tenacity of the credit union lobby. Once again, a handful of very large credit unions are putting pressure on Congressional officials to pass legislation that will increase credit unions' business lending authority from 12.5 percent of their total assets to 27.5 percent. The commercial banking industry has fought off similar attempts for such expansion in previous Congressional sessions and we are working hard to do so once again.
Much like community banks bearing the burden of overregulation designed for the megabanks, small credit unions are being sucked into the perilous efforts of their much-larger counterparts.
First, the credit union lobby argues that banks are not lending to small businesses. They also say that gaining Congressional authority to permit credit unions to deploy more capital to this sector of our economy will aid in the U.S. economic recovery. While it is true that community and regional banks have decreased lending to this sector in recent months, banks universally report significant decreases in demand for such loans. Small business borrowers have little appetite to expand human resources, inventory and plant in such uncertain times. Banks must deploy their capital to make money, and have and will continue to lend to credit-worthy borrowers, including small businesses, even in this soft economy.
Second, they argue that banks fear competition. Community and regional banks have competed aggressively and fairly for decades. Our free enterprise system is grounded in the practice that businesses should compete fairly and equitably. But somehow, credit unions have translated free enterprise to mean that their enterprise should be a different sort of "free" — free from federal and state taxes and oppressive regulations that stymie their competitors and increase the cost of doing business. Stated differently, how would any business like competing with another business essentially providing the same goods and services that was able to discount those products and services because they were not subjected to the same rules of engagement?
Our Congressional leaders should once again reject credit unions' baseless pleas. And small, singularly focused "common bond" credit unions that have been dragged into the fight to support this movement, despite their intent to stay true to their mission of serving the underserved, might soon come to understand the perils of speaking with one industry "voice." We understand. Small community banks are paying a high price for the sins and greed of their big bank competitors.
Our message to small credit unions? Be careful when you join forces with counterparts that seek an agenda different from your own, or prepare to suffer the consequences. You might soon be saddled with paying taxes and coming to grips with new regulations like the rest of us.
Christopher L. Williston is president and CEO of the Independent Bankers Association of Texas.