WASHINGTON — Same arguments different venue.

While the hearing topic was a bill to raise the cap on memberbusiness loans, credit unions and banks sparred over a range ofsubject a House subcommitteehearing.

Appearing before the House Financial Services Committee'sSubcommittee on Financial Institutions and Consumer Credit, creditunion representatives argued that raising the cap would enable themto create thousands of new jobs and better serve theirmembers.

“Raising the cap is something that is necessary and pro-growth,”said Gary Grinnell, president/CEO of Corning FCU in Corning, N.Y.,testifying on behalf of NAFCU.

But ABA Chairman-Elect Albert Kelly said any increase would“shift loans from taxpaying banks to tax-exempt credit unions.”

Kelly added that credit unions wanting to make more businessloans should convert to banks or lose their tax-exempt status.

NCUA Chairman Debbie Matz said raising the cap would allowcredit unions to diversify their investments and mitigate risks.Bankers, however, said additional lending would jeopardize safetyand soundness because commercial loans are riskier.

Rep. David Scott (D-Ga.) asked Matz how much urgency there wasfor raising the cap.

Matz replied that credit unions could serve the needs of more oftheir members. She also said credit unions make loans thatother institutions are unable or unwilling to make but said heragency doesn't keep data on how often that occurs.

Reps. Ed Royce (R-Calif.) and Carolyn McCarthy have sponsoredthe legislation and so far it has 86 cosponsors.

Sen. Mark Udall (D-Colo.) has sponsored companion legislationin the Senate and it has 21 cosponsors.

Both bills require that credit unions must be well-capitalized,be at or above 80% of the current cap, have five or more years ofmember business lending experience and be able to demonstrate soundunderwriting and servicing.

If a credit union's net worth ratio falls below thewell-capitalized requirement (currently 7%), it would have to stopmaking new business loans.