WASHINGTON (7/27/15)--Credit union loans on one- to four-unit, non-owner occupied residential dwellings are not commercial loans, CUNA told members of the U.S. House Appropriations Committee in a letter last week.
CUNA, responding to falsehoods from the banking industry, detailed how such loans should be exempt from the statutory cap on member business lending in order to better serve their members.
“At the end of the day, Congress has the ability to ensure small businesses have access to credit from lenders capable of providing it,” wrote CUNA President/CEO Jim Nussle. “Credit unions can help if you allow them to.”
Nussle was writing in support of the Credit Union Residential Loan Parity Act (S. 1440), which was introduced in May by Sen. Ron Wyden (D-Ore.). Nussle urged the legislators to closely consider what the committee may be able to do to advance the bill through the appropriations process.
Classifying such loans as consumer loans--as they are with banks--rather than business loans would help credit unions increase their lending despite the arbitrary 12.25% cap on member business lending.
“The unfortunate fact is that Congress imposed this cap because in 1998 the bankers successfully took advantage of a legislative situation in which the credit union system needed to have a new law enacted,” Nussle said. “The cap is arbitrary; it has a deleterious effect on small business lending; and it is wholly inconsistent with the credit union mission to create sources of credit for provident and productive purposes.”
In letter, Nussle also tackled bank attacks on proposals that would ensure small businesses have access to credit from credit unions, calling those attacks “willful ignorance of the credit union mission and history” as well as the purpose of credit unions’ tax status.
“Credit unions are exempt from taxation because of their structure as not-for-profit cooperatives and their mission ‘to promote thrift among members and to create sources of credit for provident and productive purposes,’” he said, directly quoting the U.S. Code’s definition of credit unions. “By contrast, banks are organized as for-profit entities with a mission to make money for their shareholders."
Reps. Ed Royce (D-Calif.) and Jared Huffman (D-Calif.) introduced a House version of the bill in March, known as H.R. 1422.