Removing Barriers Blog

CUNA sends Letter to HFSC Subcommittee in Support of MBL and Loan Parity Legislation
Posted April 14, 2016 by Chandler Schuette

Today the House Financial Services Committee Subcommittee on Capital Markets held a hearing entitled: “The JOBS Act at Four: Examining Its Impact and Proposals to Further Enhance Capital Formation.” We sent the committee a letter to encourage support for H.R. 1188, the "Credit Union Small Business Job Creation Act," and H.R. 1422, the "Credit Union Residential Loan Parity Act."

H.R. 1188, introduced by Representatives Royce (R-CA) and Meeks (D-NY), would allow credit unions to expand their business lending by increasing the statutory MBL cap to 27.5 percent. We believe this legislation could help accomplish the committee’s goal of increasing the availability of credit to small businesses. Congressman Royce highlighted the legislation during the hearing and expressed the importance of lifting the cap in order to help small businesses.

CUNA's letter also urged Congress to correct a disparity in the treatment of certain residential loans made by credit unions. When a bank makes a loan to purchase a 1-4 unit non-owner occupied residential dwelling, the loan is classified as a residential real estate loan; however, when a credit union does this, it is classified as a business loan and is therefore subject to the MBL cap. H.R. 1422, introduced by Representatives Royce (R-CA) and Huffman (D-CA), would amend the Federal Credit Union Act to provide an exclusion from the cap for these loans. This bill could also help credit unions extend more credit to borrowers seeking to purchase residential units, including low-income rental units, which may expand the availability of affordable rental housing.

For the economy to fully recover, small businesses need access to credit. Since credit unions are currently well-capitalized and have of a history of prudent and safe small business lending, we believe Congress needs to expand their ability to do so. We appreciate Congressman Royce's leadership on the issue and will continue to work with Congress to enact legislation critical to credit unions.