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CUNA Asks Senators to Lift MBL Cap
Thursday, March 26, 2015 6:40 AM

On Tuesday, the U.S. Senate Banking subcommittee on securities, insurance, and investment hosted a hearing on reducing small business burdens, and Credit Union National Association submitted a letter for the hearing's record. The letter discussed how statutory limits on credit union member business lending (MBL) restricts the growth of small business and the jobs it creates.

"Credit unions understand that in order for the economy to fully recover, small businesses need access to affordable credit as well as a variety of sources of equity to develop healthy capital structures to help their businesses grow and create jobs," reads the letter, signed by CUNA President/CEO Jim Nussle. "Credit unions have capital to lend, a history of prudent and safe small business lending, and a mission to help provide access to credit to their members--including their small business-owning members. They just need Congress to act."

Since 1998, credit unions have been subject to a cap limiting MBL to 12.25 percent of assets. CUNA is advocating to Congress for the cap to be removed, or at least raised to 27.5 percent of assets.

The U.S. Department of the Treasury has been working with the National Credit Union Administration to develop proposed legislation that would allow credit unions approaching the cap to apply to the NCUA to lend up to 27.5 percent of assets.

"If the cap is not increased, the ability of credit unions at or approaching the cap to help small business-owning members raise capital will be jeopardized," the letter reads. "On the other hand, permitting credit unions with experience in business lending to expand lending to their small business members, could result in an additional $16 billion to small businesses in the first year, helping them to create more than 150,000 new jobs."

CUNA's letter also mentions other policy changes that it supports to help spur capital formation in specific sectors. For example, banks issuing loans secured by non-owner occupied residential properties with one to four units may count them as residential loans, but credit unions that make identical loans must treat them as commercial loans, which count against the cap.

A bill that would exempt such loans from the MBL cap was introduced last week by Reps. Ed Royce (R-CA) and Jared Huffman (D-CA), and has CUNA's support.