Community Bankers on Capitol Hill Speaking Out Against MBL Bill

A news release issued by the Independent Community Bankers of America (ICBA) this week read, “Stopping the credit union power grab,” giving a fitting mission statement for the group, which has often worked alongside credit unions, as it descended on Capitol Hill this week for its annual Washington Policy Summit.

The ICBA’s primary focus appears to be speaking out in opposition to S. 2231, the bill to raise the credit union member business lending (MBL) cap from 12.25 percent to 27.5 percent of assets that is currently making its way toward the Senate floor for a vote.

“Community bankers do the bulk of the nation’s small business lending and are key to supporting a robust economic recovery,” said Jeff Gerhart, chairman of the ICBA and of Bank of Newman Grove (Neb.). “Having ICBA member community bankers in Washington to ensure the community bank perspective is heard loud and clear is critical to Main Street communities.”

The ICBA statement hit the typical talking points, alleging that credit unions are attempting to step outside their original intention and claiming that their tax-exempt status somehow conflicts with the idea of lending to small businesses.

“Expanding credit union commercial lending powers would be unfair and harmful to community banks and the communities they serve and costly to taxpayers because it would reduce the taxable lending activities of community banks, and it would further divert credit unions from their mission,” the statement said.

This hyper-focus on the MBL issue is not limited to Washington, D.C., however, as the issue continues to earn attention nationwide.

A poll in “American Banker” magazine, whose readership is theoretically disposed toward the banking industry, shows that opposition for the MBL bill is not as pervasive even among bankers as the bill’s opponents are purporting. Asking the question, “Should CUs Be Permitted to Expand Small-Business Lending?”, 28 percent of the poll’s respondents said, “Yes—competition is as healthy for lending as it is for other markets.” An additional 17 percent said, “Maybe—as long as credit unions are required to hold plenty of capital to cover losses, business lending is fine.”

The remaining 55 percent said, “No—as tax-exempt institutions, credit unions should stay focused on individuals.”

“The Coloradoan,” a newspaper in the home state of Sen. Mark Udall, S. 2231’s sponsor, published an article this morning touting the potential benefits of raising the MBL cap and outlining the battle between banks and credit unions that the bill has come to represent.

Raju Chebium wrote in the article: “Small businesses often require loans under $200,000, which are too small ‘to be worth the time of banks or … don’t fit the lending guidelines of a bank’s corporate headquarters,’ Udall said on the Senate floor last month. ‘Credit unions stand ready to lend money.’

And credit unions continue finding new ways to advocate for the MBL measure and the larger credit union movement. Gesa Credit Union issued the following call-to-action this week:

“Our local small businesses are the engine that drives our economy and helps our communities grow. Right now, credit unions have an opportunity to help local small businesses and our communities grow even stronger. The U.S. Senate is considering a bill that would increase the amount credit unions can lend to small businesses. A vote on this bill, The Credit Union Small Business Jobs Bill S. 2231, is expected soon.

“Gesa Credit Union is asking their members and the community at large to let Sens. Patty Murray and Maria Cantwell know how much this bill will help our local small businesses. Here’s how: Go to Gesa Credit Union’s website, and click on the link to email both senators asking them to support S. 2231. A message is provided by the Credit Union National Association (CUNA), a credit union trade association.

“Local business owners Fraser Hawley, Sharon Brown and Todd Ray know first-hand how a credit union loan can help a business. Fraser Hawley and Sharon Brown own Cynergy Center Retail Buildings, a mixed-use strip mall in Kennewick. In the midst of constructing a second medical building on their property, they needed to refinance their business loan so they could complete construction. They turned to Ben Rutledge, Assistant Vice President of Business Lending at Gesa Credit Union and got the job done.

“‘I had done a previous loan with Ben so I knew his expertise, and I wanted the local relationship Gesa offers,’ Hawley said. ‘We refinanced at a good rate and completed our construction. My wife is Kennewick’s mayor pro-tem and we’re entrenched in the community. I believe in keeping business dollars in the community, and I appreciate that Gesa handles everything locally. They know our businesses and have their fingers on the pulse of what’s going on.’

“Todd Ray owns SS Equipment, Inc. a farm equipment supplier with locations throughout Eastern Washington and in Oregon. He has commercial building loans, his main operating line of credit, and two vehicle loans with Gesa. ‘It’s nice to bank with Gesa because of their stability—and more importantly—their focus on the member,’ he said. ‘Gesa is locally managed and loan decisions are made here rather than other institutions I’ve dealt with that send applications to a service center in some urban location that doesn’t understand the farm equipment business.  I also like the fact that I know where Gesa stands and that they enjoy working with us.’

“Senate bill S. 2231, the Credit Union Small Business Jobs Bill would increase the ability of well capitalized credit unions with successful histories of member business lending to make member business loans up to 27.5% of total assets, an increase from the  current 12.25% cap. This would add an estimated $13 billion to the nation’s small businesses and 140,000 in new jobs at no cost to taxpayers.”


Questions? Contact a member of the Association’s Legislative Affairs team:

Jennifer Wagner, Vice President of Legislative Advocacy
Mark Minickiello, Vice President of Legislative Affairs
Stacy Augustine, Senior Vice President & General Counsel

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