WASHINGTON–A joint letter from every state bankers association to the congressional leadership is citing “great concern” over credit union requests to temporarily lift the member business loan cap as part of stimulus legislation being considered by Congress.
In the letter, the associations, saying they represent banks of all sizes in every state, said they support broad-based solutions that address the many challenges “faced as our communities confront COVID-19. We do, however, look with great concern at ideas that are not in that spirit. We write to urge Congress to reject opportunistic and unnecessary requests for credit union charter enhancements in the midst of a pandemic, including calls for expansion of the Member Business Loan cap.”
The bankers stated the issue is “entirely unrelated to the current crisis,” and argued crisis-specific programs like the SBA Paycheck Protection Program (PPP) already do not count against the cap.
“This provides credit unions with ample current authority to engage in these government programs that serve their communities,” the letter states. “Moreover, as government supports draw down, credit unions are likewise not limited in their ability to serve their communities. Currently only 30 credit unions subject to the cap are at risk of hitting it; that is just five-tenths of one percent of the industry as a whole. Thus, greater than ninety-nine percent of credit unions nationwide will not be impeded by the cap in meeting the needs of a robust economic recovery.”
The letter further states that regulatory and statutory changes that have occurred over the past four years have made additional changes unnecessary, and cited a CUNA op-ed following one piece of legislation that read, "Taken together, we can officially declare final victory on the system's 20-year battle to restore credit union business authority. Indeed, these two changes will provide more cap space than we had been seeking in the old Royce-Udall legislation that aimed to raise the cap to 27.5%."
Credit unions, the letter concluded, “have the tools they need to serve their membership during this time.”
Clarification Urged on Garnishments
Separately, a coalition of consumer and banking organizations have sent a letter to congressional leaders urging them to clarify at the earliest possible opportunity that economic impact payments issued by the federal government in response to the coronavirus pandemic should be exempt from otherwise legally binding garnishment orders.
As CUToday.info has reported, some Americans who have received a $1,200 stimulus payment from the federal government have had the funds garnished due to overdrafted accounts or other creditor-related issues.
“Congress passed the CARES Act to help families purchase food and other necessities to make ends meet. Many people were already struggling prior to the coronavirus crisis and millions have now been laid off or had their hours cut,” the letter reads. “The intense demand for the emergency unemployment benefits that Congress authorized has overwhelmed state unemployment agencies and has led to delays in people receiving those benefits, especially for self-employed or 1099 workers who do not fit within previous unemployment application procedures. This makes quick access to the economic impact payments all the more essential.”
Issue Overlooked
According to the letter, under the CARES Act Congress exempted these payments from offset for debts owed to federal and state agencies, except in the case of child support, but did not address court-ordered garnishments to pay creditors.
“While financial institutions and even many debt collectors and debt buyers believe that the payments should be exempt from garnishment orders, some creditors have continued to attempt to garnish and freeze bank accounts,” the letter states. “Banks are obligated to comply with garnishment orders unless lifted by a court. Yet many consumers do not know that they may have a legal defense to those orders under state exemption laws or for other reasons, and the crisis has also made it difficult to impossible to access attorneys or the courts – presenting due process issues. The lack of clear, self-executing protection for the stimulus payments imposes a significant burden for some families facing unprecedented circumstances.”
The letter states that only lawmakers can provide the legal clarity needed to address this situation.
The Signatories
The letter was signed by the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, The Clearing House, National Consumer Law Center (on behalf of its low-income clients), Americans for Financial Reform, Center for Responsible Lending, Consumer Action, Consumer Federation of America, Consumer Reports, National Association of Consumer Advocates and U.S. PIRG.