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	Corning FCU's Gary Grinnell represented NAFCU in yesterday's House subcommittee hearing on H.R. 1418. Grinnellsaid he will have tostop doing new, job-promotingMBLs next yearwithout acap lift.- NAFCU photos

Oct. 13, 2011 – NAFCU and other credit union representatives told lawmakers in a hearing Wednesday that a higher member business loan cap would allow credit unions to supply more capital to small businesses and lead to greater jobs growth – the economy's single largest challenge right now.

"Industry estimates suggest that enacting H.R. 1418 could help spur over $13 billion in new lending and create over 140,000 new jobs in the first year alone," said Gary Grinnell, president and CEO at Corning FCU in Corning, N.Y., on behalf of NAFCU before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit. "In an environment where job creation is so important, it is unfathomable to the nation's 93 million credit union members that Congress would not move forward with such a bipartisan, commonsense approach."

He asked, "Who could be opposed to job creation and making our economy stronger?"

Wednesday's hearing, chaired by Rep. Shelley Moore Capito, R-W.Va., was held to discuss H.R. 1418, the Small Business Lending Enhancement Act introduced this May by Reps. Ed Royce, R-Calif., and Rep. Carolyn McCarthy, D-N.Y. As of Tuesday, the bill had 88 cosponsors, with Reps. Marcy Kaptur, D-Ohio, and Tim Holden, D-Pa., the latest to sign on.

During thehearing, no lawmaker or witness stepped up to say they opposed jobs growth. But banking witnesses framed the issue of more MBL authority for credit unions as representing more competition for them at a time when small-business credit demand just isn't there.

Royce challenged that. He pointed to a Federal Reserve survey showing that three-fourths of those seeking business credit from banks in 2010 were either denied flat or provided only a portion of what they requested.

"I don't believe (H.R. 1418) would be a cure-all," Royce said, but it is "worth consideration."

NCUA Chairman Debbie Matz, the first to testify, said the current, 12.25-percent-of-assets cap on MBL activity "constrains all credit unions" because it doesn't allow them to achieve economies of scale that make business lending a viable activity. She added that the delinquency ratio for MBLs has been on the decline, and is lower than business loan delinquencies at banks, even as credit unions' business lending has grown 44 percent from year-end 2007 through the second quarter of this year.

Matz and Grinnell both noted a Small Business Administration report that showed credit unions' small-business lending grew through the recession as banks' small-business lending declined. In 2010, business lending was up 5 percent at credit unions and down 7.6 percent at banks, adjusted for inflation.

NCUA Chairman Matz said MBLs are a prudent way for CUs to mitigate interest- rate risk while serving members.

Despite that, and despite others' contention that credit unions don't want or need more MBL authority, bankers remained adamantly opposed to H.R. 1418. They said if credit unions want more MBL authority, they should give up their tax exemption and become banks.

"I don't want to be a bank," Grinnell told one of the subcommittee members. "We like being a credit union… we like being focused on our members" and not stockholders.

Rep. Brad Sherman, D-Calif., spoke strongly in favor of H.R. 1418. "This bill may be the only thing this committee passes . . . that creates jobs," Sherman said. "I just haven't met a small business person in my district who has said ‘don't let credit unions make loans to my business' . . . [there are] thousands of people in my district that can't get a loan from the bank."

Rep. Rubén Hinojosa, D-Texas, expressed doubt that credit unions could handle the added authority given current strains on their capital and their obligations under corporate credit union stabilization. Rep. Blaine Luetkemeyer, R-Mo., said he thinks the current number of credit unions providing MBLs demonstrates an overall disinterest in more of that type of lending.

Others, however, wondered what the fuss is about. "If there is no need [for more MBL authority}, what is the harm in authorizing it?" posed Rep. Bill Huizenga, R-Mich.

Rep John Carney, D-Del., asked if it would be better to have no cap at all. "That would be my preference," Matz responded.

Rep. Lynn Westmoreland, R-Ga., said "the most important thing credit unions and banks can do now is work together."

Grinnell, in his testimony, offered a win-win: Couple the MBL cap lift in H.R. 1418 with H.R. 1697, the Communities First Act. That bill would ease certain regulatory reporting and other requirements for community banks.