WASHINGTON — Banks are again urging policymakers to reject proposals that would allow credit unions to make more business loans.
In a letter Wednesday, Camden Fine, chief executive of the Independent Community Bankers of America, asked President Obama to resist efforts by credit unions to capitalize on the economic malaise by having their business-lending cap raised. Recent proposals would increase the cap to 27.5% of a credit union's assets, more than double the current 12.25% limit.
"Though Congress and Republican and Democratic Administrations have rebuked this power grab for more than a decade, the billion-dollar credit unions are now attempting to leverage ongoing deficit reduction and job creation initiatives to force through their agenda," Fine wrote.
The letter was in part a response to one last week from the National Association of Federal Credit Unions, urging President Obama to raise the cap. The group wants the administration to allow more commercial lending by credit unions as part of a comprehensive job-growth plan. Pending legislation in both the House and Senate would also increase the lending limit.
But Fine said such a move is counter to credit unions' mission, as well as their current tax-exempt status.
"There is no solid policy justification or empirical evidence for allowing credit unions to expand their dangerous, tax-subsidized mission creep even further into commercial lending," he wrote.
Fine said the administration should instead recommend that the tax-exempt status for large credit unions be revoked as part of ongoing negotiations to reduce the federal deficit.
"With a large and growing federal deficit, policymakers — and in particular the newly-created Joint Select Committee on Deficit Reduction — should consider taxing credit unions with assets in excess of $1 billion rather than forcing taxpayers to further subsidize them," he wrote.
Patricia Briotta, a NAFCU spokeswoman, said opposition by banks to raising the cap is not a surprise to anyone.
"We're simply asking them to lift an arbitrary cap that doesn't cost the taxpayers anything, and that will undoubtedly promote job creation and help stimulate the economy," she said.
