Good News, Bad News

Last week brought both good news and bad news to the banking community. On the good news side of the ledger, the Senate did not include proposed language in the so-called JOBS Act (“Jumpstart Our Business Startups”) that would have increased the business lending limits for credit unions from 12.25 percent of assets to 27.5 percent. This good news happened, despite a swarm of nearly 5,000 credit union advocates who had descended upon Washington DC to lobby the issue. To counter credit union misguidance, both the American Bankers Association and the Independent Community Bankers of America corralled grassroots support from bankers, who advocated successfully against this expansion. Coincidentally, ABA also was hosting its spring government relations summit last week, resulting in the presence of some 1,000 bankers on the Hill. The battle was won, but the war is far from over.

A second piece of good news is that the JOBS Act included an increase from 500 to 2,000 shareholders to necessitate Securities and Exchange Commission reporting. I have written about this issue in the past, and you may recall that the SEC has the power to make this change regulatorily. Perhaps passage of the increase by the Senate will cause the SEC to issue a regulatory change, rather than have Congress cast a law potentially worse than SEC regulation. We will see. Regardless, our industry has taken another positive step toward resolving this issue.

On the bad news side, we must look again at the credit union business lending limit issue. Even though the Senate refused to allow this amendment to the JOBS Act, and despite the floor speech by Banking Committee Chairman Tim Johnson—in which he warned that increasing credit union business lending limits would be “very controversial,” and that no consensus had been reached—Senate Majority Leader Harry Reid has advanced authority to skip the Banking Committee and take the issue directly to the floor. Thus the credit union issue can be amended into other bills or placed on the docket separately. The bottom line is that banking advocates will have to remain vigilant throughout the remainder of this Congress.

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