ACB: Press Releases

Joint News Release

Contact:	Robert Schmermund (202) 857-3104 Jim Eberle (202) 857-3145	ABA – Charlotte Birch (202) 663-5470	For Immediate Release March 1, 2006
E-mail: [email protected]

JOINT NEWS RELEASE — BANKING TRADE GROUPS CALL ON CONGRESS TO REJECT CREDIT UNION’S LATEST EXPANSION OF POWERS

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WASHINGTON, D.C. (March 1, 2006) — The American Bankers Association, America’s Community Bankers and the Independent Community Bankers of America called on Congress today to oppose legislation that would increase credit union powers and allow them to further expand into commercial lending while enjoying unfair tax-subsidized status.

“Disguised as a regulatory relief bill, H.R. 2317, the Credit Union Regulatory Improvements Act of 2005 would allow tax-exempt credit unions to expand into full-blown commercial lending while lowering their minimum capital standards,” the groups said in a joint letter to Congress. “It’s important not to forget that credit unions were granted special tax-subsidized status to serve people of modest means, not finance commercial enterprises.”

“We are urging Congress to forego granting tax-exempt credit unions even more authority to make business loans, when they fail to show how they fulfill the very mission for which they were established — serving the underserved,” the trade groups said. “Congress already spoke on this issue when lawmakers put in place limits on business lending and excessive risk-taking by tax-exempt credit unions.”

The bill would increase credit unions’ business lending authority from the current cap of 12.25 percent to 20 percent of total assets and to exclude all business loans of less than $100,000 from the cap, up from the current $50,000 level.

“The current limits on business lending were specifically put in place by Congress in 1998 to limit excessive risk-taking by tax exempt credit unions and to help maintain their focus on serving ‘people of small means’ instead of making loans to luxury hotels, as some credit unions are doing,” the groups said.

The bill would “exacerbate the inequities fueling the aggressive expansion of complex credit unions, while putting both smaller credit unions and tax-paying financial institutions at a greater competitive disadvantage. We strongly urge you to oppose H.R. 2317.”

The joint association letter is attached.

America’s Community Bankers is the national trade association committed to shaping the future of banking by being the innovative industry leader strengthening the competitive position of community banks. To learn more about ACB, visit www.AmericasCommunityBankers.com.

The American Bankers Association, on behalf of the more than two million men and women who work in the nation’s banks, brings together all categories of banking institutions to best represent the interests of this rapidly changing industry. Its membership-which includes community, regional and money center banks and holding companies, as well as savings associations, trust companies and savings banks-makes ABA the largest banking trade association in the country.

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