January 20, 2017 at 5:00 am ET
Dear President Donald Trump:
I write to you today on behalf of the National Association of Federally-Insured Credit Unions, the only trade association exclusively representing the interests of our nation’s federally-insured credit unions at the federal level. We would like to thank you for your focus on small businesses, jobs, and the economy as well as your commitment to reduce our nation’s regulatory burden.
Credit unions — not-for-profit, member-owned financial cooperatives — are Main Street’s financial institutions. They are widely recognized by lawmakers and federal regulators for not engaging in the careless behavior that brought about the financial crisis. In fact, during the height of the crisis, credit unions continued to lend to everyday Americans when the banks started to turn them away. Credit unions have a keen understanding of and empathy for the capital needs of small businesses. They also recognize the vital role that small businesses play in our nation’s continued prosperity. Small businesses are the spark that helps fuel our economy and account for 99.7 percent of U.S. employers. Over the years, credit unions have demonstrated their deep commitment to helping hardworking Americans succeed in business and in life.
A 2011 study commissioned by the Small Business Administration’s Office of Advocacy found that during the financial crisis from 2007 to 2010, while banks’ small-business lending decreased, credit union business lending increased as a percentage of assets. Today, credit unions continue to help small businesses grow. As of September, credit unions’ outstanding small-business loans rose 14 percent to $60 billion.
Moreover, credit union loans fill a necessary niche. Based on “NAFCU’s 2015 Economic & CU Monitor,” only 27.2 percent of bank loans to small businesses were less than $1 million, compared with 85.4 percent of credit union loans to their member small businesses.
Credit unions would like to do more to support America’s entrepreneurs and promote our economic leadership. Unfortunately, credit unions are hindered from lending more to small business due to an arbitrary lending cap that effectively limits their total business loans to 1.75 times of their net worth. Eliminating this unnecessary regulatory burden would allow credit unions to make more capital available to small business to help create jobs and grow our economy.
In fact, the current regulatory environment has been suffocating the credit union industry. We have lost approximately 20 percent of the industry since the second quarter of 2010, when Dodd-Frank was implemented — an average of one credit union merges or closes every single day. Today, there are only 5,844 federally-insured credit unions. Credit unions provide financial services with low fees, competitive interest rates and exceptional service. As credit unions continue to disappear, small businesses and consumers are faced with fewer safe, low-cost options for credit. Credit unions desperately need meaningful regulatory relief in order to continue providing high-quality products and services to their more than 106 million members.
Ultimately, we believe America needs more Main Street and less Wall Street. The recent surge in the U.S. Small Business Optimism Index report by the National Federation of Independent Business since your election underscores this belief. Importantly, we believe this philosophy echoes the focus in your acceptance speech that you want to help many hardworking men and women realize their full potential and build a better and brighter future. We welcome the opportunity to work together with you and your administration to help Make America Great Again and help Main Street small businesses realize their American dream.
President and CEO
National Association of Federally-Insured Credit Unions
Morning Consult welcomes op-ed submissions on policy, politics and business strategy in our coverage areas. Submission guidelines can be found here.