A bill that would raise the cap for credit union member business lending recently received support from Senate Banking Committee members and credit unions but has been discouraged by the banking industry.
National Association of Federal Credit Unions Chairman Mike Lussier told senators during a hearing last Thursday that many credit unions have capital to lend small businesses but are limited by an “outdated and arbitrary” cap.
Senator Mark Udall (D-Colo.), along with 19 bipartisan cosponsors, recently introduced a bill that would raise the member business-lending cap from 12.25 percent of total assets to 27.5 percent.
“Senator Udall’s bill will provide a much‐needed boost to help small businesses expand and hire,” Sen. Chuck Schumer (D-N.Y.) said during his opening remarks at the hearing. Schumer provided estimates that the bill could directly lead to over $12 billion in new lending and create up to 14,000 new jobs.
American Bankers Association representative Stephen Wilson testified before the committee. Wilson said, when taking into consideration credit union federal tax exemptions, that this move would be an unfair advantage over banks.
In his testimony, Lussier said that a large number of banks do not pay corporate federal income tax because of their Subchapter S status and suggested the committee hold hearings on the unfair advantage banks have over credit unions.