MBL Cap Hike Still Up in The Air
For the past few years, advocates have continued to push for increasing the member business lending cap, and 2011 saw more of the same efforts.
The latest appeal came from NAFCU President/CEO Fred Becker, who penned another letter to President Obama asking that the current 12.25% of assets be increased to 27.5%.
“Unfortunately, due to the outdated member business lending cap, the ability of credit unions to assist their members and local small businesses is unnecessarily hindered,” Becker wrote in a Dec. 7 letter. “In keeping with your request for policymakers to present job creation measures that won’t impose a burden on taxpayers, increasing the member business lending cap would not cost the American taxpayer a single dime.”
Becker tied his letter to a speech President Obama made Dec. 6 in Osawatomie, Kan., where he spoke on income inequality and measures to assist the poor and middle class.
“As stated in your speech, a vast majority of financial service professionals want to do right by their customers,” Becker said. “Credit unions across the country share this sentiment and take pride in the steadfast service they have been able to provide their members throughout the financial crisis.”
Bipartisan legislation to lift the MBL cap (H.R. 1418/S.509) continued to gain momentum in Congress throughout the year. The House bill is sponsored by Rep. Ed Royce (R-Calif.) and Rep. Carolyn McCarthy (D-N.Y.). Sen. Mark Udall (D-Colo.) has sponsored a companion bill in the Senate.
CUNA President/CEO Bill Cheney made the rounds with Congress reaching out to several key legislators to make a case for the MBL cap change. The trade group estimates that credit unions could lend an additional $13 billion to small businesses in the first year after enactment of this legislation, helping to create over 140,000 new jobs if the Small Business Lending Enhancement Act passes.
“During the economic crisis, credit unions continued to lend when the banks pulled back lines of credit. And, despite the difficulties of the last few years, credit union charge-off and delinquency rates on business loans have been lower than similar rates by banks,” Cheney wrote in a Dec. 1 letter to Banking Committee Chairman Tim Johnson (D-S.D.) and ranking member Sen. Richard Shelby (R-Ala.)
As 2011 edged along, CUNA, NAFCU and other supporters suggested the cap increase could help bolster stalled unemployment figures by providing more capital access for small businesses, which could, in turn, create more jobs.
Looking ahead to 2012, some industry watchers remain cautiously optimistic about the MBL cap increase. However, like previous years, a clear sign has yet to emerge on if that change will occur. What continues to work in credit unions’ favor is the attention the matter has created in Washington.