Congress: Expand Credit Union Business Lending Authorities Now
I discovered that Credit Union Times’ coverage of Telesis Credit Union’s conservatorship and the actions leading up to it were being used against credit unions’ efforts to expand the member business lending cap from 12.25% of assets to 27.5%. Specifically, the ICBA sent an email (obtained by CU Times) to Sen. Mark Udall highlighting articles we had written about the conservatorship of Telesis and the former CEO’s compensation.
As a journalist, my instinctual response to this discovery was, ‘The news is the news.’ Credit Union Times is respected for balanced coverage of the credit union community—good, bad and ugly. And even when it’s not easy, deep down the industry expects nothing less.
That responsibility is something we take very seriously. Unfortunately, negative coverage of credit unions can bring ammunition to those who would wipe them off the face of the earth.
After a moment’s reflection, the second feeling I had was pride in the power of an independent press. What Credit Union Times does matters to a lot of very powerful people in credit unions, in banks, in Congress, and even in the White House. The thought is both awe-inspiring and humbling. An NCUA board candidate—a presidential appointee—recently withdrew from consideration, I believe in part, because of our reporting on her credit union’s poor performance.
As editor, I can say that none of this is easy. Our work is stressful. I’m not looking for pity, but only to explain that Credit Union Times cares very deeply about the future of this industry and the people in it. We endeavor to demonstrate that by providing balanced and relevant news coverage every day.
Frankly, for the bankers to use our news pages as support for their arguments against increasing the cap is disingenuous. “Telesis was allowed, by the NCUA, to go above and beyond the 12.25 percent cap on member business loans and it was a contributing factor to its demise. ICBA is adamantly opposed to any increase in member business lending for tax-exempt credit unions,” the group’s email read.
In fact, I am a very strong believer in expanding credit unions’ business lending authorities. So what can I do to fulfill the need to cover the news, unbiased, while still supporting one of credit unions’ top legislative efforts of the decade?
I’d like to formally endorse S. 2231. Sen. Udall is 100% right in stating how unbelievable it is the federal government won’t allow credit unions to expand their business lending efforts when creating jobs is allegedly a top priority. Increasing employment opportunities is also what will help everyone in Washington keep their own jobs this election season. According to a March 6 letter from CUNA, “We estimate that if this bill became law, credit unions could lend an additional $13 billion to small businesses, helping them create 140,000 new jobs in the first year after enactment, at no cost to taxpayers.”
At the same time the American Bankers Association issued a release bragging that the nation’s 2,000 agricultural banks had created just over 6,000 jobs at those banks. That’s three jobs per bank—three very important jobs, but still just three and the banks are only talking about themselves. Credit unions are talking about maybe 3,000 credit unions creating 140,000 new jobs for businesses at no additional cost to the American taxpayers. When community banks were propped up in 2012 with $30 billion from Congress to get them to spend on small business business lending, their opposition can only be described as ludicrous.
The bill has also received support from Treasury and the NCUA, which could have been another political hurdle to credit union member business lending expansion.
The NCUA is certainly laying the groundwork for telling credit unions like it is when it comes to regulating business loans, should the legislation pass and a credit union be approved. With an increased ceiling on business lending would come increased scrutiny on concentration risk. The ICBA uses Telesis as proof that credit unions cannot handle expanded business lending, but one example (OK two if you include Texans) does not taint the 1,000-plus credit unions that are doing it right. ICBA’s argument is absurd, especially as banks are cutting back their business lending.
You’d think credit unions were taking the financial institutions’ world by storm rather than holding steady at a paltry 6% market share.
The ABA had threatened to kill the JOBS bill if it had included the credit union member business lending hike. Two years ago they were posturing to kill their own $30 billion infusion if credit unions were included. Exactly what are they afraid of? Following the bankers’ logic, it would make more sense for them to support credit unions’ business lending bill if they truly thought credit unions would not do a good job of handling the new authorities.
The fact is that the bankers don’t fear credit unions’ failure to make sound business lending decisions—bankers fear credit unions’ success.