Kentucky Credit Union League President Wendell Lyons said he doesn’t think there is a silent majority of credit unions opposed to member business lending legislation, as banker lobbyists suggested in a letter to members of the Senate this week.
However, the league leader said there’s not a lot of enthusiasm for S. 2231 among his member credit unions.
Only about 25% of credit unions in the Bluegrass State make business loans, and of those, only 3% of their assets are in MBL, Lyons said. So, there isn’t a pressing need to increase the cap in Kentucky, he said.
“All politics are local, as Tip O’Neill famously said,” Lyons said. “If you’re not involved in business lending, you just don’t see the need for it. And, they don’t want to spend a lot of political capital on it. That’s not what a lot of people want to hear, but that’s reality.”
Lyons said credit unions are also concerned that business lending could result in losses during a time when the corporate assessments are already “an anchor on their earnings.”
“Like they say, you privatize gains and socialize losses,” Lyons said of the corporate assessment paid by all federally insured credit unions.
CUNA President/CEO Bill Cheney, who is currently in Poland attending the final day of the World Council of Credit Unions convention, told Credit Union Times he can understand that MBL legislation is not important to every credit union in terms of their operations today; however, Cheney said it’s important that credit unions are able to offer services to members in the future.
And, he said the current cap of 12.25% of assets is too small for most credit unions to justify the investment required to “make it work.”
NAFCU President/CEO Fred Becker responded to the bankers’ “silent majority” letter, saying, “It is a common-sense measure that could spur more than $13 billion in new lending to help small businesses create more than 140,000 new jobs – at no cost to taxpayers. It’s time for the bickering to stop and for us to work together to put Americans back to work.”
Lyons, who is a CUNA board member, said despite the lack of grassroots activity in Kentucky, the league has been active working its high-profile Republican senators: Minority Leader Mitch McConnell and MBL co-sponsor Rand Paul.
In fact, in discussions with McConnell, Lyons said the league takes the position that there shouldn’t be a business lending cap at all.
“Don’t want to paint the impression that we’re not supportive of efforts to get this legislation passed,” he said. “We’re not opposed to it. We just can’t get the grassroots amped up about it. But we think it’s good and we want to support the industry and the movement.”