WASHINGTON (9/13/12)--A Credit Union National Association (CUNA)-sponsored Capitol Hill event Wednesday focusing on the timeliness of adopting credit union business lending legislation was live-streamed on the internet, bringing the urgency of the legislation into the offices of House and Senate members, as well as headquarters of credit unions and leagues across the country.
At left, Sen. Mark Udall (D-Colo.), who is chief sponsor of a Senate bill to increase credit union member business lending (MBL), is greeted by CUNA President/CEO Bill Cheney (right) as he arrives at a Wednesday press event on Capitol Hill to shine a spotlight on the benefits an MBL cap increase would provide small businesses and the economy at large. (CUNA Photo)
The sponsors of Senate and House legislation to give credit unions more business lending authority--Sen. Mark Udall (D-Colo.) and Rep. Ed Royce (R-Calif.)--made special appearances at the event, which drew nearly 200 credit union and small business supporters, as well as members of congressional staff. The event also included panels of small business advocates, credit unions and small business owners.
Presented by the Washington-based publication The Hill
, the event was designed to highlight House and Senate legislation that would increase the credit union member business lending (MBL) cap to 27.5% of assets, from 12.25%. Members of both parties support the MBL cap increase bills, and H.R. 1418 has 140 cosponsors. S. 2231 has 21 cosponsors, and Senate leadership remains committed to a floor vote on the MBL legislation.
Speaking first, Udall said that the restriction on credit union business lending is a "regulation that we ought to lift."
"When credit unions have this additional capacity to lend to small businesses, it's a no-cost, sure-fire way to grow our economy," Udall said. "Simply put: There are credit unions with money to lend, and small businesses in many communities that need loans to spur job growth -- why don't we get government out of the way and let our economy grow?"
Noting the large group of credit union business lending supporters assembled at the briefing, Royce said he was delighted at the strong turnout of nearly 200. "It reflects the interest in what we can do to help small business in the United States; this is where we should start," he said.
Cheney noted that increasing the MBL cap for credit unions is one of the few issues that can bring divergent groups together in the partisan atmosphere of Washington. The economy desperately needs every reasonable chance it can get to help create new jobs, and the time is now for Congress to pass legislation giving credit unions more authority to make business loans, Cheney added. "It comes down to this," Cheney said: "We know the economy needs to add jobs; we know small business needs greater access to credit; we know we have at least a partial solution at our fingertips. That is: Give credit unions more authority to make business loans."
In one of two panel discussions, Eli Lehrer of the R Street Institute said the two MBL cap increase bills are policy changes Congress needs to consider "seriously" and at the earliest possible date.
Panelists said they saw no clear reason to oppose an MBL cap increase, and while banks have claimed there is no demand for small business loans, John Arensmeyer, CEO of The Small Business Majority, said his own experience has shown universal demand for small business loans across the country.
A Small Business Majority survey discussed during the event found that around 60% of small business owners said it is harder now to get a loan than it was four years ago. Another 60% said they have had issues accessing loans to help them grow their businesses and hire more workers, and 52% of respondents said they have used credit cards, not small business loans, to help finance their businesses. Small business owners overwhelmingly backed increasing the MBL cap for credit unions, supporting that change by a 2 to 1 ratio, according to the survey.
Most small businesses need small chunks of capital, and that is where credit unions can step in, Arensmeyer said. There's no reason why businesses should not have access to as much credit as they need, from as many sources as possible, he added.
Lehrer noted that a large percentage of credit union small business loans go to specialized business sectors, such as taxi cab drivers and organic farmers, that may be overlooked or misunderstood by larger lenders.
While CUNA has estimated that the proposed MBL cap increase could inject $13 billion in funds into the economy, creating as many as 140,000 new jobs in the first year following enactment, Steve Pociask of the Competitive Enterprise Institute said the value of an MBL cap increase may be, in fact, undervalued. When people get these new jobs, they will spend what they earn, creating a multiplier effect throughout the economy. He also noted that many of these loans could go to small start-ups, helping spur new innovation in the economy.
Eric Blinderman, International Litigation Counsel, and owner of two New York, N.Y. restaurants, and Zachary Davis, owner of The Penny Ice Creamery in Santa Cruz, Calif., both emphatically supported increasing the MBL cap. Blinderman noted that the multiplier effect from increased business lending would have a broad impact, helping both his employees and the farms his restaurants work with.
Brad Green, CEO of Listerhill CU, Muscle Shoals, Ala., and Brooke Van Vleet, CEO of St. Helens Community FCU. St. Helens, Ore., also spoke on the second panel. Green said his credit union has been forced to deny loans to extremely qualified borrowers due to the MBL cap. Van Vleet said her credit union, which currently provides $56 million in funds to 200 MBL participants, is helping fund the local economy by supporting a broad range of businesses in an area with high unemployment. She said her credit union is grandfathered, and is not subject to the 12.25%-of-assets MBL cap, but would only have the authority to lend around $20 million if it were subject to the cap, cutting the credit union's portfolio in half.