ALEXANDRIA, Va. (6/18/13)--"It's time for Congress to act" and pass legislation that would increase the credit union member business lending (MBL) cap, and give credit unions greater authority to access secondary capital sources, National Credit Union Administration Board Member Michael Fryzel wrote in the June edition of The NCUA Report.
"For the almost five years that I have sat on the NCUA board, national trade organizations, credit unions across the country and NCUA have tried to convince Congress to pass enabling legislation to increase the [MBL] cap and provide all credit unions with access to supplemental capital," Fryzel wrote. While the aftermath of the financial crisis meant less time to address these credit union priorities, "things are better now," he added.
"It's time Congress got serious" and reached a consensus on these two issues. Doing so, Fryzel said, "would enable credit unions to become stronger financial institutions, spur small business formation and growth, and help thousands of people across this country to get a job as a result of a credit union [MBL], or to join a credit union."
The Capital Access for Small Businesses and Jobs Act (H.R. 719) would allow well-capitalized credit unions to match a growing deposit base from a growing membership with capital from sources other than retained earnings--which currently is the only type of capital that counts toward capital ratio. It was introduced in February by Rep. Pete King (R-N.Y.) and has 31 co-sponsors, including Rep. Spencer Bachus (R-Ala.), the immediate past chair of the House Financial Services Committee.
Separate House (H.R. 688) and Senate (S. 968) MBL bills were also introduced earlier this year. Both bills would increase the MBL cap from 12.25% of assets to 27.5%. The Credit Union National Association has estimated that lifting the MBL cap would create 140,000 jobs and inject $13 billion in new funds into the economy, at no cost to taxpayers.
Each year that passes without passage of these bills "is another year of disappointment," Fryzel said. "Congress must provide the tools that can help create new jobs, build new businesses, improve the financial futures of our citizens and make credit unions stronger," he added.
For more of The NCUA Report, use the resource link.