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Bankers Target MBL Again in Senate

Credit unions are in the final push to pass member business lending legislation in the U.S. Senate and House, and bankers are again targeting U.S. Senate offices to oppose the measure.  U.S. Senate bill S. 2231, the Credit Union Small Business Jobs Bill and U.S. House bill H.R. 1418, the Small Business Lending Enhancement Act, would raise the credit union member business lending limit from 12.25% to 27.5% of assets. 

The Independent Community Bankers of America (ICBA) contacted all Senate offices on October 23, stating that Congress should not increase the MBL cap because of 1,003 federal charter credit unions that are now eligible for the Low-Income Credit Union (LICU) designation.  The National Credit Union Administration (NCUA) notified these credit unions of their eligibility in August.

The Credit Union National Association responded with information about the member business lending impact of the LICU designation.  CUNA stated, in part:

The banks would have you believe that NCUA’s recent letter to 1,000 federally-chartered credit unions notifying them that they could be eligible to receive a “low income” designation from the regulator has, in effect, magically relieved Congress of the need to enact legislation permitting the credit unions with the most business lending experience to continue to lend to their small business members.  Nothing could be further from the truth: 

  • Of the 1,000 credit unions that received the NCUA letter and deemed eligible for the Low Income Credit Union (LICU) designation, 774 are not offering any business loan products.
  • There are 503 credit unions actively affected by the credit union member business lending cap, meaning they are making decisions today about how to manage the cap, and in some cases, they are turning away new and existing business members.
  • Of the credit unions eligible for LICU status, only 34 are close enough to the cap that accepting this designation could mean much needed near term relief from the business lending cap. 
  •  That leaves 469 of 503 credit unions that still need their cap raised. 
  • Recall that CUNA estimates that raising the 12.25% cap to 27.5% would produce a conservatively-estimated first-year increase of $14 billion in loans and 157,000 jobs nationally.  Further examination of the 1,000 LICU CUs reveals that these credit unions represent less than 8% of the 157,000 new jobs and less than 8% of the $14 billion in additional lending that we are estimating with a cap increase.
  • Finally, any credit union that adopts LICU status will find that the MBL cap waiver is not necessarily a solution – that’s because LICU status can change over time:  Any credit union that loses LICU status – for example, due to changing demographics in the areas in which they operate - will lose the MBL cap waiver.

“Credit unions are NEVER going to apologize for trying to serve consumers, especially low-income ones,” says Don Cohenour, Missouri Credit Union Association interim president/CEO.  “The MBL bill is still needed for Missouri small business owners who need more – not less – lending options, and to allow the credit unions that stand ready to help them fill that need.”  

Take Action

A call to action is coming soon for credit union contacts to all Missouri U.S. House and Senate offices regarding member business lending to take effect.  Please watch Missouri Difference and email notices for more details.

A National Hike the Hill is scheduled for November 27-28 in Washington, D.C.   Missouri credit union leaders and small business owners are asked to participate.  It is the Tuesday and Wednesday immediately following Thanksgiving.

Schedule of events:
Tuesday, November 27
Fly in
Hill visits as needed (scheduled by MCUA)
5:30 – 6:15 p.m.        Legislative Briefing – Senate Russell Building, Kennedy Room 325

6:30-8 p.m.                 Reception

Wednesday, November 28
8:30 a.m.                      Briefing at Credit Union House (if unable to participate in 11/27 briefing)
All Day                          Hill visits (as scheduled by MCUA)
6 p.m.                           Debriefing and Reception (if able to attend)
After  4:30 p.m.             Fly home

RSVPs are needed by November 5 (earlier if possible).    Please inform MCUA if your credit union will be able to participate in the National Hike the Hill on November 27-28, and if you will be able to include a small business owner in this Hike.   There are several hotel blocks available on a first-come, first-served basis.

Contact Amy McLard via email or 314.542.1370 with your Hike the Hill plans or any questions regarding National Hike the Hill.