Banking Blog

• Tweet
• 
• Email

• Tweet
• 
• Email

The banks and credit unions are at it again -- "it" being a nasty fight over market share.

At issue is whether Congress should expand credit unions' legal authority to make small-business loans.

The credit unions, represented by the Credit Union National Association, CUNA, say Congress should give them the green light.

The banks, represented by the Independent Community Bankers of America, or ICBA, say allowing credit unions further "mission creep" into business lending is a "flawed and dangerous idea."

The legislation's sponsor, Colorado Sen. Mark Udall, characterized the fight in a blog post as David versus Goliath, with "deep-pocketed special interest groups" as Goliath and small businesses as David.

"Colorado small businesses are starving for credit, yet an unnecessary federal regulation is standing in the way, limiting the options available for small-business loans," Udall wrote. "By simply lifting this burdensome federal regulation, credit unions will be in a position to provide small businesses with the small, low-interest loans they need to create new jobs."

Both the credit unions and banks have scored and suffered some low blows in a public press statement squabble over the issue.

CUNA says, "After devastating the housing market, retreating from the small business market, receiving taxpayer bailout after taxpayer bailout, being begged by the government to lend to small businesses and refusing that call, America's banks now come to Congress with the message: They will oppose their own regulatory relief legislation if Congress allows the credit unions to provide more assistance to small businesses."

ICBA says, "Allowing credit unions to expand their member business lending parameters could put many smaller credit unions into precarious situations, which could lead to failure. ... Senators should ask if this sort of risky lending activity … is consistent with Congress' intent of ensuring that tax-subsidized credit unions serve people of modest means."

What neither side says is that the issue is really a turf war. Credit unions want more access to banks' profitable business customers. Banks don't want their competitors to have that access.

Follow me on Twitter: @marciegeff.