The Independent Community Bankers of America has written President Barack Obama that raising the cap on credit union member business lending would primarily help a minority of larger credit unions and further erode the nation's tax base.
The letter sent Tuesday argued that more credit union member business lending would only hurt local banks. It also argued for ending the tax exemption for large credit unions.
Credit union lobbyists are expected to push again for passage of legislation raising the MBL cap when Congress returns after Labor Day.
“Expanded credit union business lending would merely displace community bank lending; it is a zero-sum proposition that would create no new lending,” the ICBA wrote.
“Further, only a small number of megacredit unions are at or near the current member business lending cap. Over 70% report absolutely no member business lending at all. Those few that are at or near the cap are the largest and most complex credit unions, and their business loans are often multimillion dollar, speculative loans – not small business loans,” the trade group wrote.
The banker group also wrote that CU business lending hurts tax income to the government.
“Because credit union lending displaces lending by taxpaying banks, it reduces tax revenue to the government and increases the deficit,” the ICBA wrote.
“With a large and growing federal deficit, policymakers – and in particular the newly created Joint Select Committee on Deficit Reduction – should consider taxing credit unions with assets in excess of $1 billion rather than forcing taxpayers to further subsidize them,” that group wrote.