WASHINGTON – The greatest obstacles to credit unions providing access to more credit for small business are the banks who oppose credit union member business lending (MBL) legislation, not a lack of designations as low-income institutions CUNA President/CEO Bill Cheney wrote in a Wednesday letter to members of the Senate and their staff.
NCUA in August reached out to 1,003 credit unions, indicating they are eligible for the low-income credit union (LICU) designation. The notified credit unions were offered a streamlined LICU application process, and many accepted the LICU designation. The designation brings benefits that include the ability to accept supplemental capital and an exemption from the MBL cap under certain circumstances.
Banks are complaining to Congress that the NCUA's LICU actions were an attempt to outmaneuver the MBL cap. The ICBA sent such a message this week.
CUNA's letter noted that banks have claimed this recent NCUA action "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," Cheney said.
Just over three-fourths of the credit unions that were offered LICU designations by the agency do not offer business loan products, Cheney continued.
There are 503 credit unions actively affected by the MBL cap, and 34 of these were offered relief under the LICU designation. "That leaves 469 of 503 credit unions that still need their cap raised," he added.
The CUNA CEO urged senators to support S. 2231, which would increase the MBL cap. MBL reform "is about giving the credit unions with the most business lending experience the opportunity to continue to lend to their members, and continue to help in the economic recovery. It is common sense legislation that raises the cap in a responsible manner and at no cost to taxpayers," Cheney said.