Business Owners Hike the Hill for MBL Increase
WASHINGTON — With legislation to raise the cap on member business loans languishing in committee, CUNA reached out to business groups to help make its case.
Business owners and credit union executives joined forces on a Hike the Hill to lobby lawmakers on a range of issues, including a measure that would raise the cap on MBLs from 12.25% of assets to as much as 27.5% of assets.
CUNA and NAFCU have been pushing the measure for several years but are hoping that the sluggish economy and slow job growth might prompt lawmakers to pass it this time.
Several business owners said that without credit unions they would have been in trouble.
“If it weren’t for a credit union, I might be out of business,” said interior contracting company owner Jim Dobbins. “They helped me when my bank decided my company was too small to lend to.”
Dobbins, whose company is located in Winston-Salem, N.C., credited Allegacy FCU for helping his firm grow from 32 employees to 50 in the past two years. The Winston-Salem-based credit union has assets of $970 million.
He added that the legislation would enable more credit unions to do the same thing for other companies. He spoke to Credit Union Times following a news conference held by the legislation’s two main sponsors.
Wendell Wakefield, who owns a gas and oil company in Roswell, N.M., said he has had trouble getting additional credit to keep his business running and if the cap were lifted his local credit union, Roswell Community FCU, would be able to lend him more money.
“Last year was a tough year. I had to lay people off because of the economy. The additional capital will help me do more and hire additional people,” added Wakefield, who used to be on the board of the credit union. He said that the credit union, which has assets of $16.5 million, has already lent him money for trucks.
Rep. Ed Royce (R-Calif.), the measure’s main sponsor, said many people in the leadership are intrigued by the bill, but he declined to assess its prospects for passage this year. He added that the bill is an approach to job creation that both Democrats and Republicans can agree on.
Rep. Carolyn McCarthy (D-N.Y.), the measure’s other lead sponsor, praised those who came to lobby their representatives because “if we don’t hear about people’s concerns, we won’t do anything about the issue.”
To take advantage of the expanded authority, the legislation would require that credit unions be well-capitalized, be at or above 80% of the current cap, have five or more years of member business lending experience and be able to demonstrate sound underwriting and servicing. If a CU's net worth ratio falls below the well-capitalized requirement (currently 7%), it would have to stop making new business loans.
The measure has 114 co-sponsors in the House. A companion bill by Sen. Mark Udall (D-Colo.) has 22 co-sponsors.
Both the House Financial Services Committee and Senate Banking Committee have held hearings on the measure, but haven’t taken any additional action. At both hearings, NCUA Chairman Debbie Matz testified in support of the measure.
CUNA President/CEO Bill Cheney said he is stressing that it can create as many as 140,000 new jobs. “It’s not a credit union-bank issue, it’s a small business issue,” he said.