WASHINGTON–The American Bankers Association has told Congress it opposes a bill that would expand credit unions’ ability to make business loans.
In a letter to Rep. Vicente Gonzalez (D-TX) and Rep. Brian Fitzpatrick (R-PA), the American Bankers Association said that it opposes H.R. 5189, the Member Business Loan Expansion Act, which seeks to broaden the business lending authority of credit unions.
“Congress placed purposeful limitations on the percentage of a credit union’s assets that can be comprised of business loans to prevent the credit union tax subsidy from being used to support large business loans for apartment buildings or strip malls, the need for which is already met by tax-paying financial institutions,” the ABA letter reads. “This proposed legislation threatens to undermine those carefully crafted guardrails.”
H.R. 5189, would lift restrictions on credit union business lending by enabling longer repayment periods, doubling the exemption for small loans and expanding access to low-cost funds for business loans.
Focus on ‘Small Means’
But the ABA, in expressing its opposition, said each of those expanded powers “will have the effect of fueling further credit union business lending expansion, all indirectly financed by their tax-exempt status.”
Instead, the ABA called on lawmakers to focus on ensuring that credit unions live up to what they said is a statutory obligation to serve consumers of “small means.”