The Senate last Thursday passed pass a small business lending bill-which includes a $30 billion fund to encourage community bank lending-but without a provision to raise the cap on member business loans from 12.25% to 27.5% of assets.
Lawmakers passed the measure 61-38. The amendment to increase credit unions' lending capacity, sponsored by Sen. Mark Udall (D-Colo.), was not among those that Senate leaders allowed to be considered.
The bank lobby threatened to withhold support for the bill if Udall's amendment was included.
Lobbyists for CUNA and NAFCU said last Wednesday that they would look for other bills to which the Udall amendment could be attached.
CUNA Vice President Ryan Donovan said the trade associations have made the public policy argument, but the issue got caught up in election year politicking. While he said they will work to find other vehicles, given the short work period for Congress this fall, "time is not our friend."
Although the small business lending bill has support from a majority of members, some Republicans had filibustered the measure. However, Sen. George LeMieux (R-Fla.) and Sen. George Voinovich (R-Ohio) broke ranks and provided the votes needed to end the filibuster. They were the only two Republicans to support the measure on final passage. All 59 Democrats supported it.
The action on the small business bill was one of the first steps Congress took when it returned from summer recess for a session that is expected to last through the beginning of October. There may be a lame-duck session following the November elections.
The proposed increase in the member business lending cap was the result of a compromise worked out by the Treasury Department, the NCUA, congressional staff and CUNA and NAFCU.
Udall's amendment, which reflects the compromise, mandates that the NCUA implement a tiered approval process so that credit unions "gradually increase the amount of member business lending in a manner that is consistent with safe and sound operations." This process would be spelled out in proposed rules that the agency must issue within no more than six months after the bill is passed. (See the Opinion article, page 12.)
NAFCU President/CEO Fred Becker wrote lawmakers that the amendment would "be a tax-free victory for small business and our struggling economy. 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."
The Senate's failure to pass an increase in the MBL cap comes in the wake of strong support among the public, according to a poll commissioned by CUNA.
An overwhelming majority of voters in congressional districts in eight states said they would want their representative to support the proposal, according to the poll.
The survey of 1,600 registered voters found that at least 68% of voters in each district-and as many as 77%-said they would have a positive reaction if their U.S. representative fought "against banks to make it possible for credit unions to provide loans to small businesses."
The survey also found that 69% of respondents favored removing the 12.25% cap on member business lending.
"The polling clearly shows that congressional incumbents and candidates will have warm support from voters if they take on the banks in support of more business lending by credit unions," said CUNA President/CEO Bill Cheney.
CUNA surveyed 200 voters in each of eight congressional districts in Colorado, Kansas, Minnesota, Ohio, Oregon, South Dakota, Texas and Washington.