After a last minute whirlwind of appeals to President Obama and Congress to consider legislation that would increase the member business lending cap, both CUNA and NAFCU are urging credit unions not to let up.
This week, the Senate is coming back from a five-week recess. The Small Business Lending Fund Act, which includes $30 billion in funds to encourage banks to lend more to small businesses, is expected to come up for consideration Sept. 13. It does not include a heavily promoted amendment drafted by Sen. Mark Udall (D-Colo.) that would increase the MBL cap.
With several new economy recovery initiatives on the table, CUNA recently urged President Obama to consider how credit unions can aid small businesses. In a Sept. 3 letter to Obama, CUNA President/CEO Bill Cheney applauded the White House's objectives to "do everything we can" to help small businesses and in turn, boost the economy. Cheney cited Treasury Secretary Timothy Geithner's support for increasing the member business lending cap and encouraged the Obama administration to include such language in the next package of legislative proposals addressing the economy.
Cheney pointed back to what may happen if the MBL cap were raised from 12.25% to 27.5% of assets, which would result an estimated additional $10 billion in new lending to small businesses in the first year after the cap's implementation and the creation of more than 100,000 new jobs.
Obama proposed several new measures last week to aid the stalled economy, including tax breaks that would allow businesses to write off 100% of new capital investments through 2011.
Last week, NAFCU sent letters to key lawmakers urging the inclusion of language that would increase the MBL cap. The recipients were Sen. Harry Reid (D-Nev.), Sen. Mitch McConnell (R-Ky.), Rep. Nancy Pelosi (D-Calif.) and Rep. John Boehner (R-Ohio).
"Given that the strength of the economy and labor force is strongly influenced by the health and well being of the small business community, lifting the arbitrary restriction on credit union's business lending ability is a common sense and cost effective way to ensure that credit worthy small businesses have the capital they need to help spur job creation," NAFCU President/CEO Fred Becker wrote.
Like CUNA, NAFCU is hoping an endorsement from Geithner coupled with the NCUA's position that it would be able to handle any modification of the MBL cap will offer extra assurance to skeptical legislators. Still, Cheney acknowledged there has been some speculation back and forth on passing the bigger bill. During a Sept. 7 conference call, Cheney urged league CEOs to contact every senator to support the Udall amendment. Cheney also named key lawmakers leagues should especially court.
"Our concern is the Udall amendment," Cheney said. "There are only a few days left. The main message now is we're coming down to the wire."
NAFCU even reached out to SBA Administrator Karen Mills last week for additional support.
"As you know, small businesses employ half of all private-sector employees, and they are a key to job creation and our nation's economical success. Unfortunately, as small businesses try to navigate through the tough economic landscape, the same large financial institutions that caused the difficulty economic conditions have reduced their small business lending," Becker wrote in a Sept. 7 letter to Mills.
In another letter to Obama, Becker noted that between December 2009 and March 2010, credit unions' member business lending increased 2% for a total of nearly $29 billion while bank business loans declined by 7.4% over the same period.
"Lifting the cap would not cost taxpayers one penny, and it would give small business access to critically needed capital to grow and create jobs," Becker appealed to Obama.
Cheney said that Udall has termed lifting the cap "a no-brainer."
"People are worried about a double dip recession. Banks are not lending and these are loans that not only they aren't making but they don't want credit unions to make them either," Cheney said. "For banks, it's all about crushing the competition."