Despite comments made by co-sponsor Sen. Chuck Schumer (D-N.Y.) April 23 that suggested a vote on S. 2231 may be delayed, credit union trade associations continue to crash the net in support of the Small Business Lending Enhancement Act.
Schumer was quoted in trade publications telling bankers that a vote on raising the member business lending cap has been delayed until this summer. The comment caused a ruckus because credit unions have been anticipating it since late March when Senate Majority Leader Harry Reid (D-Nev.) promised a vote.
The timing of the comment was suspect, as members of the Independent Community Bankers of America were hiking the hill that week, lobbying against credit union MBL. According to the congressional contribution tracking website Sopatrack, Schumer has received $20,250 from supporters of the bill, and $150,500 from those who oppose it.
CUNA Senior Vice President of Legislative Affairs Ryan Donovan said despite the publicity, Schumer is “still very much on our side” when it comes to MBL.
“His spokesman’s statement really enforces the reality of the situation, that there are a number of competing issues on the schedule,” Donovan said. “That’s something that’s always been common knowledge, and it doesn’t change what we need from credit unions and small businesses, to communicate with Congress why this bill should become law as soon as possible.”
Schumer spokesman Brian Fallon was quoted as saying a vote wasn’t expected until May or even June. However, some trade publications described May or June as “the second half of the year.”
NAFCU President/CEO Fred Becker said reports distorted Schumer’s remarks and agreed that Schumer is still in the credit union corner. In fact, Becker said it’s his understanding Schumer told bankers he supports credit unions on the issue.
“Washington is all about saying something and hoping it’s true, so that other people will believe it,” he said.
Donovan said not much has changed since Reid promised the Senate vote. “There has always been a lot of competition” on the Senate calendar. Legislation addressing postal reform, violence against women, budget resolution, a tax bill, student loan reform and cyber security compete with S. 2231.
“Cyber security has been on the calendar since the beginning of the year,” he said. Donovan added that the Senate has an ambitious schedule through May. Both the Senate and House will take a break the week of April 30 and will break again around Memorial Day.
Becker said postal reform had to be addressed by Congress because the Postmaster General had said he would start shutting down post offices May 15. The vote on postal reform was expected April 25.
Winning the vote is more important than when it happens, Donovan said. Despite the news that the vote may not happen as soon as hoped, he said it’s important for credit unions to continue lobbying members of Congress and recruiting small business owners to speak on their behalf.
“Whether the vote is tomorrow, or three weeks from now, the bottom line is you want the votes, and the way to ensure that is to engage grass-roots support. The push we’ve had over the last three weeks has been very helpful. Politics are won by the folks who show up,” he said.
If credit unions turn down lobbying efforts a notch as a result of the Schumer comment, said CUNA Executive Vice President of Governmental Affairs John Magill, and credit unions come up short on the vote, “we’d be sorry we hadn’t asked everybody to contact their senators.”
Brad Thaler, NAFCU's vice president of legislative affairs, also agreed that the Senate would probably address other legislation first. Thaler said that although lawmakers have been cautious to sign on in support of S. 2231, he’s confident credit unions will get the 60 votes needed to secure a super-majority to overcome any bipartisan challenge.
“I think a lot of people in the Senate view this as a fight between their friends and realize once they take a stand, they’re upsetting one side or another,” Thaler said. “They’re hesitant to do that until they have to.”
Credit unions picked up some new coalition members in the MBL effort in recent weeks, including several conservative, libertarian-leaning organizations who submitted a letter to Reid and Republican leader Mitch McConnell (R-Ky.). Organizations known for mobilizing the Tea Party movement, including the Heartland Institute, the Competitive Enterprise Institute, and Grover Norquist’s Americans for Tax Reform, among others, went on record in support of raising the credit union member business lending cap to 27.5% of assets. And the groups were critical of the banking lobby in the letter.
“It simply boggles the mind to suggest that the banking industry as a whole would suffer any damage from this bill. Banks currently have a 95% market share,” the groups said.
Credit unions also picked up kudos last week from the Consumer Federation of America, which expressed support for raising the MBL cap.
“Credit unions are especially deserving of this opportunity,” wrote CFA Executive Director Stephen Brobeck in a letter to senators. “They have a strong record of serving consumers and communities, especially moderate-income areas that have been particularly hard hit by the recession. They have had much past success in providing low-cost, sustainable credit to consumers and small businesses.”
Becker placed an opinion piece in The Washington Post on Sunday, April 22, in support of S. 2231. He went on the offensive against bank lobbyists who have claimed the bill would only benefit large credit unions seeking large commercial loans.
In a recent survey, Becker wrote, credit unions reported that 44% of their portfolio was made up of loans with balances below $100,000, compared with banks that only have 8%, comparatively. In contrast, loans of more than $1 million represent only 16% of credit union lending portfolios, compared with 68% of banks’.
Becker also took aim at previous legislative attempts to boost business lending, including the 2009 stimulus bill, the 2010 Small Business Jobs Act and credit enhancements that pumped up the Small Business Administration’s loan guarantee rate.
“None of these vehicles have made significant progress in improving small business’ access to capital,” Becker said. “Of the $30 billion apportioned in the Small Business Lending Fund, only $4.8 billion was actually dispersed.”
An online poll by American Banker revealed that its readers may not be as opposed to raising the MBL cap as lobbyists would have Congress believe. The poll, published April 20, revealed that while 55% of readers oppose credit union small business lending expansion, 28% are in favor of it, and another 17% would approve of it if credit unions are also required to maintain enough capital to cover potential losses.
The House version of MBL cap legislation, H.R. 1418, picked up two new co-sponsors the week of April 16, growing that list to 130 lawmakers. Rep. Mazie Hirono, (D-Hawaii), and Rep. Lucille Roybal-Allard, (D-Calif.) now officially support of the bill.
Thaler said much of the industry’s lobbying efforts have been concentrated in the upper house since Reid announced in March that S. 2231 will go to a vote. Given the dynamics of legislation in general, the Senate is a bid hurdle for passing any legislation, Thaler said. If MBL legislation passes the Senate, especially given its broad and diverse support, it will send a strong message to the House to pick up and pass the bill.