The American Bankers Association (ABA) and the Independent Community Bankers of America (ICBA) wrote to the House Appropriations Committee on June 11 opposing the use of the congressional spending process as a back door for a credit union-backed provision to further expand their member business lending powers.
The gambit in question would expand the exemption for business loans secured by a 1-to-4-family dwelling to include those dwellings that are not primary residences.
Currently, any business loan fully secured by a 1-to-4 family dwelling that is the primary residence of a credit union member is exempted from the member business loan cap of 12.25 percent of assets.
Credit unions claim that the proposal would merely create parity in loan classifications between credit unions and commercial banks.
However, the two bank trade groups wrote that the proposal would allow credit unions to finance rental housing businesses without counting these loans toward the 12.25 percent MBL asset cap. ABA and ICBA wrote: "Rental housing loans are business loans; their purpose is to generate income."
"Congress must not allow credit unions to further encroach into business lending, altering the fundamental character of their charter and expanding their already significant tax subsidy," ABA and ICBA said. "At a minimum, a change of this significance should not be considered without observing regular order and appropriate debate."
Read the letter.
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