The congressional effort to raise the member business lending cap rides again.

Rep. Ed Royce (R-Calif.) announced Thursday he has re-introduced legislation that would increase the MBL cap for credit unions to 27.5% of assets.

H.R. 688, co-sponsored by Rep. Carolyn McCarthy, D-N.Y., has been described by credit union trade associations as having very similar language to last year's House version, H.R. 1418. Royce and McCarthy have already recruited 34 additional co-sponsors for the bill, according to an announcement from Royce.

“This legislation will not only allow credit unions to lend an additional $13 billion to small businesses, but will create 140,000 new jobs in the process,” Royce said. “With a stagnant job market and unemployment rising to 7.9 percent, the Credit Union Small Business Jobs Creation Act is an important step in getting Americans back to work.”

To qualify for the higher cap, a credit union must be well capitalized, have a history of member business lending experience, be operating near the current cap of 12.5% of assets for at least one year, and receive approval from the NCUA.

“Credit unions understand that in order for the economy to fully recover, small businesses need access to credit, which will help their businesses grow,” CUNA President/CEO Bill Cheney wrote Royce and McCarthy in anticipation of the bill's reintroduction.

“Credit unions have capital to lend, a history of prudent and safe small business lending, and a mission to help provide access to credit to their members—including their small business-owning members. They just need Congress to enact your legislation,” Cheney said in his letter.

NAFCU President/CEO Fred Becker echoed the sentiment, thanking the two for introducing the bill and calling it “a jobs bill, plain and simple” that would help invigorate the nation's economy by providing lending to small businesses.

Both trades said they expect to face the same banker opposition on Capitol Hill that has stymied efforts to raise the cap for at least 10 years.

“The bill will not endanger the small banks in your community; the bill will not alter the nature or focus of credit unions; the bill is not inconsistent with the credit union mission or the purpose of their tax status. This legislation recognizes that credit unions are working in their communities to help small businesses, and it is important to enact even though the bank lobbyists oppose it,” Cheney said.

H.R. 1418 never made it past committee despite attracting 144 co-sponsors. Efforts to bring the Senate version of the bill, S. 2231, to a vote were scrapped in early December when it became apparent it didn't have enough support to pass.

Meanwhile, CUNA said it expects legislation that would allow credit unions to invest in supplemental capital to also be introduced shortly, as well as a bill that would eliminate the annual privacy mailing notice if the policy has not been changed in the last 12 months.

Instant Insights /

Congress Gets Member Business Lending Bill Again

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