WASHINGTON -- Credit unions today came a small step closer to their goal of raising the cap on member business loans when Treasury Department Counselor Gene Sperling and House Financial Services Committee Chairman Barney Frank promised action on additional proposals.
Sperling, in response to a question from Frank at a hearing on expanding small business lending, said the Obama administration supports raising the cap in some instances and would send Congress a proposal that would accomplish that soon. He said they endorse a plan to lift the cap up to 27.5% if the credit union is well capitalized, has done member business lending for at least five years and show that they have done sound underwriting and servicing.
The proposal contains more restrictions, yet allows more leeway, than the language of the legislation currently pending on Capitol Hill.
Frank (D-Mass.) said while lawmakers "hate to have a feud," his committee will be holding hearings on raising the cap, even though community bankers have expressed strong opposition to it.
At the hearing, which focused mostly on an Obama administration's proposal to make $30 billion in loans available to community banks to encourage small business lending, CUNA President/CEO Dan Mica noted that credit unions want to lend more of their own money and don't want any taxpayer assistance.
"Credit unions aren't asking for government money. We want the cap lifted so we can put $10 billion into the economy and create jobs and do it with safety and soundness," he said. "The only group that opposes it is the group that is about to get $30 billion."
Although lobbyists for the community bankers have expressed strong opposition to raising the MBL cap, the representative of the Independent Community Bankers of America-Kalamazoo County Bank CEO James MacPhee-did not discuss the issue during today's testimony, and just focused on how his group would benefit from more access to capital.