1st Advanrtage Federal Credit Union's Mike Flanary (pictured left) visits with Rep. Rob Wittman during our Hike The Hill event to encourage passage of Member Business Lending legislation.
Virginia’s lawmakers got the message that credit unions are serious about wanting to raise the cap on member business lending as advocates blitzed all 13 offices of the delegation members on Tuesday and Wednesday.
Advocates from Martinsville DuPont, Eastman, UVA Community, Northwest, and DuPont Community joined League staff Rick Pillow, David Miles and Karin Sherbin in talking to Congressmen and top aides. In true lobbyist fashion, one group even buttonholed the elusive Congressman Bobby Scott (D-3) in the hallway of his office building after talking with his aide.
Advocates did not hear any of our lawmakers saying they are willing to join our lone supporter of the cap legislation, Rep. Gerry Connolly (D-11). But lawmakers or their aides did not flat-out say no. They did acknowledge the arguments from the bankers, which are the typical ones facing credit unions on any bill we propose: we don’t pay federal income tax, we are expanding our mission. One Congressman said the bankers told him that they already compromised on this issue when H.R. 1151 was voted on.
Advocates countered by pointing out that an increasing number of banks are Subchapter S, and that credit unions have done member business lending since their inception. They did a fantastic job talking about the cap inhibiting their current programs, or stopping them from starting a program despite the local need. A video of business owners shown by Gary Tucker of Eastman to the aide of Rep. Morgan Griffith (R-9) echoed our past presentations with business owner in person: people saying that banks turned them down for business loans before they found help at the credit union.
The prospects for action on the bill remain clouded. Senate Majority Leader Harry Reid had promised a vote on the bill this session. There had been rumblings that the vote would come this week, but that possibility died as the Senate returned to its gridlock ways. Credit unions had been seeking to pair the MBL bill with the banks’ bill on transaction account guarantees, but that bill is opposed by many (see story below on Sen. Bob Corker’s opposition). Bankers also have vowed to oppose their legislation if it is paired with a credit union bill.
While the Hike may not have prompted any discernable movement, it at least held the line. The American Bankers Association has been blanketing Beltway media with ads blasting the MBL legislation, and bankers have been calling on lawmakers from Virginia and the other states to repeat their opposition. Our lawmakers need to keep hearing the credit union side of the story and that we are serious about this legislation. Otherwise, we undercut our efforts on this legislation and future legislation.
At this point, the only certainty about the MBL bills is that if member business lending legislation dies in the 112th Congress, it will return in the 113th session.
Here is a sampling of comments from Virginia’s Hike the Hill:
Sen. Mark Warner’s staff seemed interested in whether the NCUA’s recent outreach to credit unions on low income designation would solve the problem of the cap, since there would be no cap for those credit unions. The answer: no.
Senior Vice President Miles noted there are only about 35 such credit unions in Virginia and not all of them would be interested in member business lending since many are small and/or in rural areas. President Pillow repeated that credit unions have offered to work with bankers to develop a mutually beneficial legislative package.
Volunteer Mike Flanary of 1st Advantage, who also is vice chairman of the League’s Governmental Affairs Committee, provided a letter from a business owner saying that he got cut off from the Bank of America despite years of creditworthiness, and had to turn to the credit union to continue to help his business expand. Earlier this year, Sen. Warner had told credit union representatives and business owners that he was still on the fence about the bill because he thought the bankers had some good arguments. His staff repeated that the Senator probably won’t decide until the day of the vote.
In talking with staff for Congressman Bobby Scott (D-3), the Martinsville DuPont members emphasized the credit union difference in talking about the $4 million in loans under $500 made annually to help members avoid predatory lenders. These loans are made despite them not making money for the credit union.
They talked about how they could help people put out of work by store closings start their own business if they had an MBL program even with small loans of $50,000, which banks generally do not want to make. However, the extremely low cap makes it impractical for the credit union to invest in an MBL infrastructure.
Rep. Morgan Griffith (R-9) made it back to his office in time to say a few words to the credit union advocates. He said he wasn’t absolutely shutting the door on voting yes on raising the cap, but he said, “This is not an easy issue.” Griffith said he hears from bankers that raising the cap would take business away from tax-paying banks. He prefers a comprehensive bill that addresses bank issues too, such as capital requirements being raised on small banks through Basel III.
The aide to Rep. Frank Wolf (R-10) heard from Northwest representatives that an increasing number of business owners are seeking loans from the credit union. They noted that most of the business loans they make are not of interest to banks. Earlier this year Northwest brought a business owner to see Rep. Wolf and tell of his experience of being cut off from credit from his long-time bank when the financial crisis hit. He successfully turned to Northwest to keep his business alive. The aide believed the House version of the MBL bill would not come up for a vote before this session of Congress adjourns.
Rep. Rob Wittman (R-1) said he knew that capital access is not as good as in the past. Flanary argued that in a macro economic sense, the modest raise in the cap
is small and wouldn’t hurt banks. Wittman said he has told bankers that he thinks there is room for credit unions to fill a need in business lending. Wittman has a good relationship with the incoming chairman of the House Financial Services Committee, Rep. Jeb Hensarling of Texas, and he agreed to talk to him about the bill should the need arise in the next session.