NEW: CUNA action call urges CUs to oppose TAG billWASHINGTON (UPDATED: 4:00 P.M. ET, 12/6/12)--In a new call to action, the Credit Union National Association (CUNA) is encouraging its member credit unions and leagues across the country to contact and urge their senators to oppose legislation that would extend for banks the Transaction Account Guarantee (TAG) program.
The TAG bill, S. 3637, would extend unlimited deposit insurance coverage granted during the financial crisis for noninterest bearing transaction accounts. Coverage is set to revert back to $250,000 at year's end without congressional action. The bill is strongly favored by major bank trade associations.
Earlier this week, CUNA notified Senate leaders of its opposition to the TAG bill. Now CUNA is taking the next step by issuing a "call to action" mobilizing CUs and leagues. CUNA is emphasizing that a TAG extension is "risky and unnecessary," and noted that the program "has not proven to inspire additional bank business lending." CUNA suggested that there are better policy options available to Congress for igniting lending to small businesses--namely the Credit Union Small Business Jobs Act (S.2231).
In seeking a "no" on S. 3637, should it come to the Senate floor for a vote, CUNA has encouraged credit unions to tell senators to end bank bailouts and handouts. TAG has served its purpose but is now nothing more than another giveaway to banks, providing more than $1 trillion of taxpayer-backed guarantees, the CUNA call to action notes.
Banks are flush with liquidity, but still are not lending, the call to action added, noting that small banks' small business lending during the financial crisis contracted 15% while credit union small business lending expanded 45%. TAG was not successful in encouraging banks to lend to small businesses, CUNA noted.
"Congress has done so much to help the banks over the last several years--billions of taxpayer dollars have been given to banks to help them survive and encourage them to lend. The results have been unspectacular at the most," said CUNA President/CEO Bill Cheney. "The health of the banking sector is improving and the pockets of bank shareholders are once again filling with bank profits. There is no need for this legislation; senators should vote 'no' if it comes to a vote," he added.
For the TAG call to action, use the resource link.
Instead of continuing TAG, CUNA has suggested that legislators would better help the economy by giving credit unions greater business lending authority. "Credit unions are willing and able to lend to their small business members, but the most successful business lending credit unions have hit or are approaching the statutory cap on credit union business lending," Cheney wrote in a Monday letter to Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.).
Bills that would increase the credit union member business lending (MBL) cap to 27.5% of assets, up from the current 12.25% cap, have been introduced in the U.S. House (H.R. 1418) and Senate (S.2231). CUNA has estimated that the proposed MBL cap increase could inject $13 billion in funds into the economy, creating as many as 140,000 new jobs in the first year following enactment.
CUNA continues to work with members of Congress to pass credit union MBL legislation this year.