MBL Bill Could Hitch a Ride on Bankers’ TAG Extension
Credit union trade associations continue to work contacts on Capitol Hill in an effort to craft a small businesses package that would include 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 package, which would include items both credit unions and banks said they need to better serve small businesses, would end legislative gridlock among lawmakers who have said they don’t want to vote on the member business lending bill because it would alienate them from valuable credit union or bank supporters.
CUNA Senior Vice President for Legislative Affairs Ryan Donovan said while credit unions have identified MBL as key to serving small businesses, banks are lobbying for an extension of the FDIC’s Transactional Account Guarantee program, which provides deposit insurance coverage for noninterest-bearing transaction accounts.
The program is set to expire Dec. 31. According to the FDIC, TAG deposits totaled $1.4 trillion as of last Dec. 31.
For credit unions, the NCUA provides similar deposit insurance coverage for noninterest-bearing transaction accounts, separate from general share insurance coverage. It is also set to expire at the end of this year.
Donovan said while the non-interest-bearing account coverage is appealing to credit unions, raising the MBL cap would be the “best thing Congress could do for credit unions serving small businesses.”
NAFCU President/CEO Fred Becker indicated his group is also involved in the package, as revealed in a letter to House Financial Services Committee Chairman Spencer Bachus (R-Ala.) and Ranking Member Barney Frank (D-Mass.).
Becker asked the committee leaders to provide parity for credit unions in the event the FDIC TAG coverage is extended. Donovan said CUNA would also seek parity on the issue.
Becker also raised the issue of parity between the FDIC’s program that provides full deposit insurance coverage for Interest on Lawyers Trust Accounts. Congress passed a change to the Dodd-Frank law to clarify the FDIC’s ability in this area, but unfortunately failed to provide parity to credit unions, Becker wrote in the letter.
The NAFCU chief urged the committee to “carefully consider” a package that would include coverage of transaction accounts, IOLTAs, and “language to lift the arbitrary credit union member business lending cap.”
“Combining these issues, along with other possible regulatory relief measures, would be one way for the Committee to help our nation’s community financial institutions, small businesses and consumers,” Becker said.
Donovan also said IOLTA could be a part of the package that includes MBL and a TAG extension.