State banking groups issued a call to Congress for what they view as an opportunistic move by credit unions to receive favorable policy changes as a result of Covid-19, particularly expansion of the Member Business Loan cap.

In a letter to congressional leaders, state banking associations in all 50 states wrote:

"The undersigned state bankers associations, representing banks of all sizes in every state, support broad-based solutions that address the many challenges faced as our communities confront COVID-19. We do, however, look with great concern at ideas that are not in that spirit. We write to urge Congress to reject opportunistic and unnecessary requests for credit union charter enhancements in the midst of a pandemic, including calls for expansion of the Member Business Loan cap.

This issue is entirely unrelated to the current crisis. While credit unions are subject to statutory asset caps on business lending, government guaranteed loans, such as crisis-specific programs like the SBA Paycheck Protection Program (PPP), do not count against the cap. This provides credit unions with ample current authority to engage in these government programs that serve their communities. Moreover, as government supports draw down, credit unions are likewise not limited in their ability to serve their communities. Currently only 30 credit unions subject to the cap are at risk of hitting it; that is just five-tenths of one percent of the industry as a whole. Thus, greater than ninety-nine percent of credit unions nationwide will not be impeded by the cap in meeting the needs of a robust economic recovery.

Regulatory and statutory changes that have occurred over the last four years likewise make additional changes to the business-lending cap unnecessary. The National Credit Union Administration finalized a rule in 2016 that allowed credit unions to manage the cap by buying and selling parts of loans—participations—to one another. Two years later, the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) exempted certain types of rental property from the cap. “Taken together,” the largest credit union trade association boasted in an op-ed, “we can officially declare final victory on the system’s 20-year battle to restore credit union business authority. Indeed, these two changes will provide more cap space than we had been seeking in the old Royce-Udall legislation that aimed to raise the cap to 27.5%.” (Emphasis added).

"Credit unions have the tools they need to serve their membership during this time. We are proud of the joint work banks and credit unions have done together during this crisis, and both industries appreciate the important role we all play to keep liquidity flowing to communities. However, efforts to increase credit union powers in the name of a crisis, including increases to the Member Business Loan limit, are disappointing and distract from important policy priorities that are actually needed to support our small businesses."