In a letter to Senate Majority Leader Harry Reid, Republican Leader Mitch McConnell, and copied to all members of the Senate, the American Bankers Association and Independent Community Bankers of America said current member business lending limits “are entirely appropriate given the significant risk and potential losses that would be borne by all credit unions, including the 70% that do no member business lending at all.”
The letter sources three credit union executives who have written letters to their senators opposing S. 2231: Dennis Moriarty, manager of the $51 million Unity CU in Michigan, Dale Kerslake, president/CEO of the $256 million Cascade FCU in Washington state and Stuart Perlitsh, president/CEO of the $323 Glendale Area Schools FCU in California.
The measure awaits a vote by the full Senate.
Moriarty said in his letter that credit unions are already paying off corporate credit union losses, which began with expanded investment authority granted to corporates.
“Asking for an ‘expanded authority’ for higher business lending authority brings a further risk to credit unions,” Moriarty wrote. “Without asking we have already become the participants in the wind down and dissolution of credit unions that thought they ‘knew how to make business loans’.”
Kerslake wrote in his letter that both regulators and credit unions are “ill-prepared for asset-based expanded MBL” and also referenced corporate credit union expanded authority.
“Already-known future NCUSIF assessments thrust upon the nation’s weakened credit unions is something Congress must consider before granting any new authority to the credit union industry,” he wrote.
The letter also sourced a January 2012 GAO report which determined that failed credit unions had more member business loans as a percentage of assets than the credit union industry overall.
In addition, the report and letter said more than 40% of failed credit unions participated in member business lending.