ABA Opposes Legislation to Expand Credit Union Business Lending

In a letter to Rep. Vicente Gonzalez (D-Texas) and Rep. Brian Fitzpatrick (R-Pa.) today, the American Bankers Association said that it opposes H.R. 5189, the Member Business Loan Expansion Act, legislation that would broaden the credit union industry’s business lending authority.

“Congress placed purposeful limitations on the percentage of a credit union’s assets that can be comprised of business loans to prevent the credit union tax subsidy from being used to support large business loans for apartment buildings or strip malls, the need for which is already met by tax-paying financial institutions,” ABA wrote. “This proposed legislation threatens to undermine those carefully crafted guardrails.”

The legislation would erode restrictions on credit union business lending by enabling longer repayment periods, doubling the exemption for small loans and expanding access to low-cost funds for business loans, ABA said, adding that “each of these will have the effect of fueling further credit union business lending expansion, all indirectly financed by their tax-exempt status.” Instead, ABA called on lawmakers to focus on ensuring that credit unions live up to their statutory obligations to serve consumers of “small means.”