WASHINGTON -- Two powerful members of the House Financial Services Committee gave credit unions reasons to hope that Congress might eliminate or at least lift the cap on credit union making business loans to their members.
Currently, credit unions are prevented from making more than 12.25% of their assets in business loans of over $50,000 as part of the Credit Union Membership Access Act of 1998.
Rep. Barney Frank (D-Mass), chairman of the committee, told attendees at CUNA's Governmental Affairs Conference that they should celebrate the fact that the pending financial services reform legislation does not include them at all.
"We are about to pass, I hope, the most significant overhaul of financial regulation since the New Deal," Frank said when he spoke on Feb. 24 "And it will have no significant impact on credit unions."
Frank said they had worked hard to keep the NCUA as an independent regulator for credit unions and imposing minimal fees. "We judged that since you had not been part of the problem, you should not have to pay for part of the solution," he said.
He also encouraged the attendees to work hard when lobbying their representatives and senators for their support on efforts to at least raise or remove entirely the cap on credit union business lending. He noted that a realistic prospect for Senate action, in particular, would be needed to convince other House members to vote for controversial measures in an election year.
"Unless there is the prospect of real action in the Senate, it will be very difficult to convince House members to take vote on a controversial issue, especially with an election coming," he said.
Rep. Spencer Bachus (R-Ala.), the most senior Republican on the committee told the attendees that it was time for Congress to lift the cap on CU business lending.
"I think that among the strongest things you have is that your reputation has survived [the financial crisis]," he said and then, referring to Frank who preceded him at the podium, Bachus added that he had heard Frank refer to member business lending as controversial.
"I agree with him that the topic is controversial, but I believe that if there was a time to raise that level, now is the time do it," Bachus said. He noted that many larger financial institutions are not making business loans just when the nation needed them to lend.
Bachus also expressed some doubts about the government's efforts to conduct financial reform, observing that there were still firm questions about what exactly had happened to cause it.
Neither Frank nor Bachus addressed Federal Reserve Chairman Ben Bernanke's comments on the member business lending law (see page 1) as they spoke in advance of the Bernanke hearing.