The Independent Community Bankers of America and the American Bankers Association has fired off a joint letter to all U.S. senators telling them a “silent majority” of credit unions oppose S. 2231, the Small Business Lending Enhancement Act, which would raise the credit union member business lending cap from 12.25% to 27.5% of assets.
The letter referenced an April 20, 2012 American Banker story that sourced Stuart Perlitsh, president/CEO of the $323 Glendale Area Schools Federal Credit Union in California, as going on record against the bill and introducing the idea of the so-called silent majority.
Although the banker lobbyists claim Perlitsh represents a majority, the article described him as “going rogue” with his opinion, “in a break with the rest of his industry.” It also again called the credit union industry’s effort to increase the lending cap a “power grab.”
Not yet available to the public, the letter quotes another credit union executive that opposes the bill, an ICBA spokeswoman said Tuesday.
“This legislation would benefit a select few credit unions while harming taxpaying community banks,” the associations wrote in a release. “Community-based banks are prolific small business lenders and have stood by their customers throughout these difficult economic times. They are helping to expand small business credit as the recovery strengthens and demand returns, and they pay federal, state and local taxes to support their communities.”
Expanding credit union business-lending authority would increase risks to the financial system, the groups said. The Government Accountability Office reported in January that failed credit unions had more member business loans as a percentage of assets than others in the industry.
The ICBA is currently collecting signatures for an advocacy petition on its website that opposes S. 2221. Among the reasons for Congress to reject the bill is the fear that credit unions would gain business lending market share from community banks, which would reduce tax revenue to struggling federal, state, and local governments.
“At a time when governments of all sizes are desperate for revenues from any source, further reducing those revenues in the interest of the largest, multi-billion dollar credit unions would be extremely irresponsible,” the ICBA said on its website.