WASHINGTON—The political pitch to raise the credit union member business lending cap are claims that doing so will spur job growth. According to credit union executives that attended this year’s Governmental Affairs Conference, that claim is more than just wishful thinking.
Laura Illig, vice president of marketing at the $900 million SELCO Community Credit Union, said her Eugene, Ore.-based cooperative has turned members away because of current member business lending limits.
“We have small business owners come to us all the time because the banks have turned them down,” she said, “and then we also have to turn them down because of the cap.”
Illig said her contingency will share with Oregon’s elected officials the story of a new hotel SELCO funded through loan participations, the only way it was able to do so. The hotel was the first for Eugene in 30 years, and in addition to the temporary construction jobs and permanent service jobs it brought to the college town, the hotel also spurred the opening of a new restaurant nearby.
“Because of the loan, Eugene has gained 75 to 100 new jobs, plus additional tourist dollars,” she said.
Rep. Peter Defazio (D-Ore.) hasn’t yet signed on as a co-sponsor to H.R. 1418, but given the fact that quite a few congressional representatives have done so, Illig said she hopes to convince him to join them.
Jackie Cleghorn, director on the board of the $1.4 billion Robins FCU, said his Warner Robins, Ga.-based credit union is also at its member business lending limit. Cleghorn said he doesn’t know if the credit union has had to turn away members due to the cap, but lifting the cap would allow his team to participate in local economic growth.
“Because our economy is driven by the air force base, we’ve been relatively sheltered from the economic downturn,” he said.
Rep. Ed Royce (R-Calif. told GAC general session attendees Wednesday morning that H.R. 1418 has more than 120 co-sponsors, and urged credit unions to tell personal stories to their representatives to give the bill even more momentum.
This bill “is important because in the economy now there are so many small companies that want to expand,” Royce said. “This would give them the ability to get that loan or line of credit … that is so essential to turning the economy around.”
Royce also prepared credit union executives for opposing arguments they may hear from their elected officials because bankers had hiked the hill just the day before. Bankers are arguing that raising the member business lending cap would threaten credit union safety and soundness, he said. However, the NCUA has said that business loans would in fact help credit unions prudently manage risk.
Rep. Maxine Waters (D-Calif.) pledged her support to H.R. 1418 during GAC’s Tuesday general session. “It is clear to me that we must increase the limit,” she said. Waters, who will take over as the ranking Democrat on the House Financial Services Committee, said despite Massachusetts Rep. Barney Frank’s planned retirement at the end of this legislative session, credit unions will “gain the best friend they’ve ever had in Congress” when she takes control of the gavel.
“You have heard about a lot of ways to help small businesses in Congress,” she said, “but you don’t need to look any further than credit unions.”
On the Senate side of the Capitol, Sen. Mark Udall (D-Colo.) talked up his version of the member business lending bill, telling GAC attendees efforts to raise the cap have been the only part of the jobs act that would actually create jobs.
The primary author of S. 509, Udall repeated earlier reports that Senate Majority Leader Harry Reid (D-Nev.) promised a vote on the bill this session.
“I will introduce this bill as an amendment to anything that moves across the floor this year,” Udall said. “You and I will find a way to get a vote on this bill as soon as possible.”
Like Royce, Udall urged credit union leaders to tell their personal stories to their elected officials, and direct them to contact his office for more information.
Rep. Carolyn McCarthy (D-N.Y.) told her audience that credit unions serving underserved areas in her district are very important to her. She encouraged credit unions to disregard the politics and banking lobbyists and focus on what they do best-helping people.
“It’s time to let credit unions help small businesses, because that’s what important,” she said, not politics.