WASHINGTON (11/17/11)--Credit Union National Association (CUNA) President/CEO Bill Cheney encouraged Congress to take a balanced approach to regulatory relief that would aid both credit unions and community banks, and called on them to combine credit union member business lending (MBL) legislation with community bank regulatory relief legislation during a Wednesday hearing before the House Financial Services subcommittee on financial institutions.
Cheney (pictured testifying to the left) said CUNA supports portions of the Communities First Act (H.R. 1697), which would loosen some community bank regulations, but added that credit unions will not let any regulatory relief legislation for banks move forward absent similar relief for credit unions.
He suggested that adding provisions of H.R. 1418, which would lift the credit union MBL cap to 27.5% of total assets, to provisions of H.R. 1697 would result in a bill that could "be embraced by all who serve businesses on Main Street." Rep. Ed Royce (R-Calif.), who is a main sponsor of H.R. 1418, also supported combining portions of the two bills.
Some in Congress have recently questioned the need for a credit union member business lending cap increase, citing a lack of demand, but Cheney in Wednesday's hearing said he has heard first hand of the demand for these types of loans. He also noted that the original mission of credit unions was to lend to small businesses, and added that restricting small business lending is harming overall economic growth.
Cheney also called for greater regulatory flexibility for credit unions and community banks, and encouraged legislators to craft language that specifically addresses issues faced by smaller institutions. One-size-fits-all regulations create problems for smaller institutions, and limiting these types of regulations would help small institutions and allow them to spend more time working within their communities, Cheney said.
Credit unions and community banks should work together to pursue regulatory relief, but, Cheney said, any potential efforts are harmed when legislation that would reduce the credit union regulatory burden is "almost always reflexively opposed" by community banks that "mislead Congress with misinformation regarding the credit union charter and mission" and attempt to "leverage the credit union tax status to prevent new credit union powers."
Banker opposition to credit union legislation "has meant that hundreds of thousands of jobs that could have been created through additional credit union business lending have gone uncreated," has prevented many Americans from having access to affordable financial services, and "has constricted credit unions' ability to grow and better serve their members.
"When banks oppose credit union legislation, their shareholders may win, but consumers and small businesses lose," Cheney said.
Rep. Maxine Waters (D-Calif.) during the hearing urged credit unions and community banks to work out their differences, and when prompted by questioning from Rep. Brad Sherman (D-Calif.), Independent Community Bankers Association CEO Sal Marranca said he would not be opposed to allowing credit unions to raise supplemental capital if community banks were permitted to issue preferred stock for capital purposes as subchapter S banks.
For the full CUNA testimony, and more on the hearing, use the resource link.