Frank Keating
President and CEO
202-663-5111
[email protected]
March 11, 2015
To:
Members of the U.S. House of Representatives
From: Frank Keating, President and CEO, American Bankers Association
Re:
Opposition to H.R. 1188, the Credit Union Small Business Jobs Creation Act
The American Bankers Association (ABA) is writing to renew our strong and emphatic
opposition to any legislation which would expand the credit union industry’s authorities beyond
the original intentions of Congress—such as the recent introduction of legislation (H.R. 1188)
designed to increase the member business lending (MBL) cap of credit unions.
As in previous years, the credit union industry will be asking Members to support this legislation
in order to increase their MBL cap. What the credit unions will not share with you is that the
legislation would benefit only a handful of growth obsessed credit unions.
The argument that the credit union business loan cap is somehow constraining credit union small
business lending is a falsity. Credit unions already have ample authority to engage in small
business lending. Loans under $50,000 do not apply against the business loan cap—nor do loans
guaranteed by federal, state or local government agencies. Loans secured by 1-4 family primary
residences and deposits at credit unions also do not count against the business loan cap. The
reality is that credit unions have ample flexibility to lend to small businesses, but growth
obsessed credit unions want to raise the MBL cap so that they can make increasingly large
commercial loans. But, surely such loans are not deserving of a taxpayer subsidy.
H.R. 1188, the Credit Union Small Business Jobs Creation Act, introduced by Representatives
Ed Royce (R-CA) and Gregory Meeks (D-NY), more than doubles the current congressionally
imposed limits on credit union business lending authority. The ABA opposes this legislation. We
believe it is wrong to permit credit unions to use their tax subsidies to cherry-pick loans that taxpaying community banks would gladly make.
This legislation would benefit a select few credit unions—65 percent of credit unions do no
member business lending at all—while harming tax-paying community banks. Community based
banks are prolific small business lenders and have stood by their customers throughout difficult
economic times. They are helping to expand small business credit as the recovery strengthens
and demand returns, and they pay federal, state and local taxes to support their communities.
The average U.S. family of four will pay more in federal income taxes than the entire credit
union industry of over 6,000 financial institutions. The credit union industry should no longer be
granted additional special privileges at the expense of your taxpaying constituents. If the credit
union industry continues to seek expanded authorities beyond Congressional intent and continues
to become more like banks, they should pay federal income taxes like banks.
ABA urges Members to support local community banks by opposing H.R. 1188 and any
legislation which would expand the credit union industry’s authorities beyond the original
intentions of Congress.