The battle between banks and credit unions could result in neither party achieving its desired outcome, as different policies advocated by both parties fail to sway Washington lawmakers.
The Credit Union National Association has urged Congress to not extend the Transaction Account Guarantee program, which has been advocated by small banks as a measure that will allow them to lend more freely. The TAG program was intended to allow businesses increased liquidity in times of economic distress.
The group said that the extension was crisis-inspired and is “no longer necessary, is risky [and] has not proven to enhance bank business lending,” adding that “there are better options available to help small business.”
Bill Cheney, the president and CEO of CUNA, said that Congress should instead support S. 2231, the Small Business Lending Enhancement Act.
On Tuesday, however, CUNA said that it had notified members that S. 2231, a bill to raise the member business lending cap, lacked sufficient support to pass in the Senate. CUNA said late last month that the bill did have the 60 votes required to pass in the Senate.
Pat Keefe, a spokesman for CUNA, said that while the MBL legislation may still be included in other legislation, “a standalone bill…probably wouldn’t make the grade,” Credit Union Times reports.
Additionally, Keefe said that members of Congress want to be put in the position of challenging the banking lobby, a similar argument made by congressional leaders to explain the lack of a vote before November elections, even though Harry Reid, the majority leader in the Senate, vowed one year ago to do so. Keefe also said that the bill would not only fail to garner enough support but that House leaders have indicated that they would prefer it if the bill was added to a legislation package.
CUNA had originally been working with banks to design an MBL-TAG package but rescinded its support for the measure in a letter to Reid and Mitch McConnell, minority leader of the Senate.
“We felt from what we were hearing on the Hill, the best path for us is to let [bankers] know we’re not fooling around,” Keefe said, according to Credit Union Times.