WASHINGTON – Senate Majority Leader Harry Reid (D-Nev.), who promised credit unions a vote on member business lending (MBL) legislation by the end of this year, introduced a bill Monday night (S. 3637) that would temporarily extend the Transaction Account Guarantee (TAG).
The TAG bill, supported by banks, would provide unlimited federal insurance for transactional account deposits, such as checking accounts used by businesses. Community bank lobbyists have argued that without TAG, large business depositors would move their accounts to big banks under so-called “too big to fail” protections, and take their lending business with them.
The credit union industry has urged the Senate to include an increase in credit unions’ MBL cap in any final legislation extending TAG.
CUNA executive vice president John Magill told Reuters back in July that the senators CUNA talks to have indicated that "marrying TAG, which the banks really want, with the MBL bill, which we are lobbying for, would work."
Magill noted that CUNA will work to ensure that TAG will not end up passing unless the MBL bill is passed; "CUNA has been promised votes in the House and Senate on its bill. The banks don't have a bill or a vehicle to attach one."
Not surprisingly, bankers are opposing the package deal and the American Bankers Association will have members hiking the hill this week in an attempt to counter messaging from credit unions and small business owners that will be visiting legislators as part of a formal CUNA Hike-the-Hill event.
CUNA Senior Vice President of Political Affairs Richard Gose said the credit union MBL Hike-the-Hill event was planned well in advance of the bank counter offensive. He said the banking industry has a lot of issues before Congress, not just fighting member business lending by credit unions.
“But, if they want to argue about small business, the economy and job growth, that’s their prerogative,” he said.