Removing Barriers Blog

Nussle Rebuts Banker Arguments Against 1-4 Bill
Posted July 24, 2015 by CUNA Advocacy

Today, CUNA President and CEO Jim Nussle sent a letter to the Senate Financial Services and General Government Appropriations Subcommittee in response to inaccurate information sent to the Subcommittee by the Independent Community Bankers of America.  The bankers wrote the Subcommittee because we had been lobbying the Subcommittee to include S. 1440, the Credit Union Residential Loan Parity Act, as an amendment to its annual funding bill. S. 1440 is about bringing parity to the treatment of 1-4 family non owner occupied residential loans.  Credit unions must treat these loans as business loans, but a bank would consider this a residential loan.  The legislation would exclude these loans from the member business lending cap.  

As they did when the House subcommittee considered their appropriations bill, the bankers weighed in again in opposition to the legislation.  But their letter was riddled with inaccuracies, false claims and willful ignorance of the credit union mission and history. Our letter was meant to set the record straight.  

“At the end of the day, Congress has the ability to ensure small businesses have access to credit from lenders capable of providing it,” wrote Nussle.  “Credit unions can help if you allow them to.”

“The unfortunate fact is that Congress imposed this cap because in 1998 the bankers successfully took advantage of a legislative situation in which the credit union system needed to have a new law enacted,” Nussle said.  “The cap is arbitrary; it has a deleterious effect on small business lending; and it is wholly inconsistent with the credit union mission to create sources of credit for provident and productive purposes.”

In letter, Nussle also tackled bank attacks on proposals that would aimed at allowing small businesses to access credit from credit union, calling those attacks “willful ignorance of the credit union mission and history” as well as the purpose of credit unions’ tax status.

“Credit unions are exempt from taxation because of their structure as not-for-profit cooperatives and their mission ‘to promote thrift among members and to create sources of credit for provident and productive purposes,’” he said, directly quoting the U.S. Code’s definition of credit unions.  “By contrast, banks are organized as for-profit entities with a mission to make money for their shareholders.

Instead of including our bill or the banker priorities, the Appropriations Committee decided to include the entire Financial Regulatory Improvement Act (FRIA) of 2015 in its Financial Services and General Government bill.  FRIA is a broad regulatory relief bill that includes more than a dozen credit union and small bank regulatory relief priorities, sponsored by Senate Banking Committee Chairman Richard Shelby, who is also a member of the Appropriations Committee.  The legislation was passed by the full Senate Appropriations Committee on Wednesday.  It is unclear when or if the legislation will be considered by the full Senate.  Nevertheless, CUNA will continue to pursue credit union legislative priorities in all available legislative areas.

For more information, please contact John Hildreth.