House Subcommittee Holds Hearing on Member Business Lending Legislation

Oct. 17, 2011 - The House Subcommittee on Financial Institutions and Consumer Credit held a hearing on Oct. 12 to discuss enhancements to member business lending capabilities for credit unions.

National Credit Union Administration (NCUA) Chairman Debbie Matz testified in support of increasing the cap on MBL with prudent regulatory parameters as included in H.R. 1418, Small Business Lending Enhancement Act of 2011.
The Senate Banking Committee held a hearing in June on the companion bill, S. 509.

“More than one in five credit unions making member business loans that are subject to the cap have reached 50 percent or more of this ceiling,” stated Matz at the hearing. “If Congress increases the current cap, NCUA would promptly revise our rules to protect credit union safety and soundness." Chairman Matz reassured Members that the agency would implement a tiered approach for credit unions and make the necessary regulatory enhancements.

At the hearing, Rep. Gregory Meeks (D-NY) commented on the unique problem credit unions face when increased deposits negatively impact net worth due to credit unions' sole reliance on retained earnings. Chairman Matz again publicly restated her support for supplemental capital options for qualifying credit unions. NASCUS has also long supported allowing credit unions to use supplemental capital and will continue to encourage Congress to act on the necessary legislative amendment to net worth. 

Chairman Matz was followed by a second panel of industry representatives who expressed their support for enhancements to MBL capabilities. Jeff York, President and CEO of Coasthills Federal Credit Union testified on behalf of the Credit Union National Association (CUNA) and Gary Grinnell, President and CEO, Corning Credit Union, testified on behalf of the National Association of Federal Credit Unions (NAFCU). Mike Hanson, President and CEO of the Massachusetts Credit Union Share Insurance Corporation also testified in support of H.R. 1418.

Representatives from the American Bankers Association and the Independent Community Bankers of America testified against extending the MBL capabilities of credit unions arguing that credit unions’ federal income tax exemption puts banks at an unfair advantage when offering a similar product.

H.R. 1418 has 89 co-sponsors and S. 509 has 20 co-sponsors (as of 10/14/11).