November 17, 2011
Bill Cheney, President and CEO of the Credit Union National Association (CUNA), testified before the House Financial Services Committee regarding H.R. 1697, the Communities First Act. This legislation is aimed at regulatory relief for community banks but also contains many provisions that would apply to credit unions.
Cheney stressed throughout the hearing that community banks and credit unions are aligned in their need for regulatory relief. He urged Congress to take a balanced approach that would ease the regulatory burden on credit unions as well as banks.
“Credit unions and community banks operate side-by-side in communities across the country to meet the financial services needs of consumers and small businesses,” Cheney said. “If there is one area that credit union and community banks should work together, it is in the pursuit of regulatory relief legislation. Unfortunately, whenever credit unions propose regulatory relief legislation, the banks oppose it. We have evaluated the legislation, and there are several provisions of the bill which we can support.”
Cheney’s testimony identified and supported several of the provisions of the bill that apply to credit unions, and he made clear that industry support for the bill is contingent on support for an increase in the member business lending (MBL) cap. He also highlighted the need for modernization of capital requirements, including supplemental capital, and an Independent Community Bankers of America (ICBA) witness said during the hearing that he would not be opposed to supplemental capital for credit unions.
“We were consistent in our support of H.R. 1697,” Cheney said, “so long as it contained similar relief for credit unions.”
Rep. Ruben Hinojosa, D-Tex., who was vocally unsupportive of credit unions during October’s MBL hearing, remained a skeptic, maintaining that credit unions should be subject to taxation if their business lending capacity is increased. Cheney offered more background about the history of credit union business lending and urged Hinojosa to review the current proposed MBL legislation, known as “H.R. 1418: The Small Business Lending Enhancement Act of 2011,” and consider its potential for job creation.
As the hearing drew to a close, Rep. Brad Sherman, D-Calif., asked the bank witnesses to explain why the committee should help banks at the exclusion of credit unions. “The banks replied with the argument that if credit unions wanted to do more business lending, they should convert to a mutual thrift charter,” Cheney said. “Dismissing the response, Sherman pointed out he had been waiting for many of his Republican colleagues to convert to Democrats, but it was unlikely to happen.”
Cheney’s invitation to offer input was in some ways a landmark for the credit union movement in and of itself. Bank representatives are often invited to hearings on legislation that would impact credit unions, but credit unions have only rarely been giving the opportunity to weigh in during hearings related to the banking industry.
“All things considered, this was a good day for credit unions on Capitol Hill,” Cheney said. “Appearing at the community bank hearing is an important milestone for credit unions and an important step in the process of achieving member business lending cap relief and capital reform.”
Video footage of Cheney’s full testimony is available online.
Questions or Concerns? Contact Matt Halvorson, Anthem Editor: firstname.lastname@example.org.