A day after Federal Reserve Chairman Ben Bernanke raised doubts about the wisdom of raising the cap on member business lending, CUNA President/CEO Dan Mica met with Treasury Secretary Timothy Geithner to urge the administration support legislation that would raise the cap from 12.25% of assets to 25%.
In a memo to the CUNA Board and state credit union leagues after Thursday's meeting, Mica didn't characterize the reaction he and CUNA Senior Vice President and Chief Economist Bill Hampel received from the Treasury Department but he said he believed the department is "actively discussing our issue and giving it due consideration."
CUNA and NAFCU are lobbying hard to get the cap increase included in legislation, on subjects such as jobs creation and regulatory restructuring that are working their way through Congress. The Obama administration hasn't taken a position on the issue, though it recently proposed creating a program aimed at helping community banks by using funds returned to the government from TARP to provide loans to those banks that they would use to increase their business lending.
On Wednesday, in response to a question from Rep. Brad Sherman (D-Calif.) at a hearing, Bernanke said credit unions enjoy a "tax favored" status and that gives them certain competitive advantages, which should be considered before granting other privileges, including raising the cap on member business lending.
Mica said in his memo that they responded to objections raised by other financial services industry to raising the cap and they also discussed the need for legislation to allow more credit unions to accept secondary capital.