Banks’ attacks against a supplemental capital bill for credit unions are spurious, will go nowhere, and run counter to a growing interest among members of Congress in capital reform for all financial institutions, CUNA said Monday, as reported in News Now.
“The Independent Community Bankers of America Association's criticism of the Capital Access for Small Business Act (H.R. 719) is disingenuous and will be seen as such on the Hill,” said John Magill, CUNA’s executive vice president of government affairs after the banking trade group circulated a letter to federal lawmakers attacking the legislation.
“The truth is, this bill is very balanced,” he continued. “That is and will continue to be our message on Capitol Hill. It would provide credit unions with the appropriate ability to raise capital from sources other than retained earnings without in any way jeopardizing the ‘one member, one vote’ principle that is the bedrock of the credit union ownership structure.
“Moreover, this bill also would strengthen the safety and soundness of credit unions by allowing them to develop a supplemental cushion as an added safeguard,” he noted.
The bill, introduced Feb. 14 by Reps. Pete King (R-N.Y.) and Brad Sherman (D-Calif.), would allow well-capitalized credit unions to match a growing deposit base from a growing membership with capital from sources other than retained earnings.
The bill is substantially similar to last year’s H.R. 3993, which had 45 co-sponsors. “Congress is showing greater interest in capital reform, and we expect our legislation to be part of the discussion,” said Magill.
In January, CUNA named a four-pillar 2013 legislative agenda, which includes advancing charter enhancements and which named supplemental capital and increased member business lending (MBL) as two priorities.
Within a day of the introduction of the supplemental capital bill, Reps. Ed Royce (R-Calif.) and Carolyn McCarthy (D-N.Y.) reintroduced legislation (H.R. 688) to increase the MBL cap to 27.5% of assets, from the current 12.25%. Both bills were the focus of advocacy efforts on Capitol Hill when more than 4,200 credit union leaders came to Washington recently for CUNA's Governmental Affairs Conference.
To counter the bankers’ latest misinformation, CUNA is providing more information to key offices on Capitol Hill regarding the need for supplemental capital and increased MBL authority.