Kanjorski Urges Pelosi and Miller to Include Credit Union Lending Reforms in Jobs Creation Package

WASHINGTON - Today, Congressman Paul E. Kanjorski (D-PA), the Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, sent a letter to Speaker Nancy Pelosi (D-CA) and Congressman George Miller (D-CA), Chairman of the House Committee on Education and Labor, urging them to include H.R. 3380, the Promoting Lending to America's Small Businesses Act, in the jobs creation bill that they are now drafting.  Chairman Kanjorski's bipartisan legislation would enable credit unions to make more small business loans and create jobs at a time when our country needs an economic boost.  A recent analysis by the Credit Union National Association showed that these reforms have the potential to create as many as 108,000 jobs and make available as much as $10 billion in credit to small businesses in the first year after enactment.

"During this time of economic uncertainty, many businesses, especially small businesses, are facing severe problems accessing credit in order to create and maintain jobs," said Chairman Kanjorski.  "H.R. 3380 would work to fix this problem by using credit unions, which have remained above the fray of the financial crisis, as a resource to boost lending to small businesses, and as a result, encourage job creation without a cost to taxpayers.  The bill has common sense reforms that ought to be incorporated into the jobs creation bill that the House will soon consider."

The text of Chairman Kanjorski's letter to Speaker Pelosi and Chairman Miller from December 2 follows:

Dear Madam Speaker and Chairman Miller:

As you work to draft legislation to create jobs and reduce unemployment, I very strongly encourage you to consider including reforms to allow credit unions to do more to assist America's small businesses by incorporating the credit union member business lending provisions contained in my bill, H.R. 3380, the Promoting Lending to America's Small Businesses Act of 2009, into the package.  According to a recent analysis by the Credit Union National Association, these reforms have the potential to create as many as 108,000 jobs and make available as much as $10 billion in credit to small businesses in the first year after enactment.

As you know, America's small businesses are the engine of our Nation's economy.  The financial crisis, however, has unfortunately decreased the availability of credit for this vital sector of our economy.  Large commercial banks and other lenders like CIT, which recently filed for bankruptcy, have pulled back in the amount of credit they are making available to small businesses to create new jobs and purchase new equipment.  America's credit unions could help to fill this gap, but an existing statutory cap on their business lending activities has forced them to largely sit on the sidelines when they have the capacity to help.

Credit unions are already helping their members start businesses, as well as helping their members with established businesses.  They could do even more if Congress raised the member business lending cap.  Unfortunately, an arbitrary restriction imposed in 1998 has so far limited their ability to promote greater economic growth during the current economic downturn.  Prior to the enactment of this statute, credit unions had no cap on their member business lending activities.

With the unemployment rate now at 10.2 percent, Congress must take bold action to promote business growth and job creation.  The time is therefore now to let credit unions help America's small businesses.  For these reasons, I have introduced bipartisan legislation, H.R. 3380, to increase the credit union member business lending cap from 12.25 percent of a credit union's total assets to 25 percent, raise the de minimus level of a credit union business loan to $250,000, and exclude loans made in underserved areas from the cap.

As noted above, the passage of the reforms contained in H.R. 3380 could create as many as 108,000 new jobs and make available as much as $10 billion to small businesses in the first year after enactment.  Moreover, raising the credit union member business lending cap represents an economic stimulus that will not increase the size of government and comes at no cost to the taxpayers.  In short, it is an effective and prudent policy reform.

Credit unions are well suited to serve small businesses and help them to create jobs.  The average credit union business loan is about $215,000, which means that credit union business loans go to the small businesses on Main Street, not the big corporations on Wall Street.  According to several analyses, credit union business loans also have lower delinquency and charge-off rates compared to similar loans made by banks.

Furthermore, these reforms have the support of credit union regulators.  Last week, National Credit Union Administration (NCUA) Chairman Debbie Matz wrote to a senior official at the Treasury Department to call for raising or eliminating the statutory cap on member business loans.  In her letter, NCUA Chairman Matz noted that "lending limitations should be regulatory, not statutory"; I wholeheartedly agree.

In sum, I hope that you will seriously consider including the reforms found in H.R. 3380 in the jobs creation package that you are now drafting.  I also look forward to continuing to work with you on this vitally important economic issue.

Sincerely,

Paul E. Kanjorski

Chairman

Subcommittee on Capital Markets, Insurance,

   and Government Sponsored Enterprises

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