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July 25, 2012 – The community banking lobby has ratcheted up its efforts to stop action on a credit union member business lending cap lift by asking the Congressional Budget Office to calculate the cost of the two NAFCU-backed bills to increase credit unions' MBL authority.

In a July 23 letter to CBO Director Douglas Elmendorf and Joint Committee on Taxation Chief of Staff Thomas Barthold, the Independent Community Bankers of America said H.R. 1418 and S. 2231, bills that would raise credit unions' MBL cap from 12.25 percent of total assets to 27.5 percent, "are often misrepresented by some as a ‘cost-free' means of expanding small business credit. They clearly are not."

The letter largely repeats the group's longstanding arguments about MBL being bad for credit unions' mission and unfair to community banks because of competition and the credit union tax exemption.

In April, both sides of the MBL debate were examined in an American Banker article. While the article challenged claims of the amount of lending that would result from a cap lift, it also said that S. 2231 "clearly includes numerous provisions designed to protect U.S. taxpayers." In a 2010 letter to lawmakers, the Treasury Department described the approach taken in the MBL legislation as reasonable.

NAFCU President and CEO Fred Becker said the ICBA's stance in opposing an increase in MBL authority is ironic given that "several hundred community and regional banks accepted bailout funds from the Troubled Assets Relief Fund, yet they are still not lending to small businesses."

He added that credit unions are not-for-profit, member-owned institutions that return profits to their members through better and more affordable services, not to select shareholders. Furthermore, he says, "raising the MBL cap would help maximize the availability of credit to American small businesses and help our economy recover."

In related news, a July 24 article in Reuters, "Credit unions banking on bills to lift small business lending," touts the benefits of raising the MBL cap.

The article talks about how Phoenix entrepreneur Eric McCarthy got turned down for a small business loan by all the big banks, but then got help from Mountain America Credit Union in Salt Lake City, Utah in the form of a $300,000 loan. "The big banks didn't want to lend a little money; they wanted to lend a lot of money," McCarthy says.

The article also pulls data from FDIC on banks' lending and quotes Rohit Arora, CEO of Biz2Credit, who says giving credit unions expanded MBL authority would be a good move.

NAFCU continues to urge credit unions to remain vigilant in pressing for action on the MBL cap increase provided in H.R. 1418 and S. 2231. It is also pushing Senate leadership to follow through on comments from Majority Leader Harry Reid, D-Nev., that a vote will be held.