Dear President-Elect Donald Trump and Vice President-Elect Mike Pence,

As conservative, libertarian, and free-market organizations concerned about government regulatory overreach, we applaud the steps you and your transition team are taking to root out regulations that provide little value and obstruct job growth.

Many of us have provided your team with our own lists of horrific rules that your administration should halt. Yet it has come to our attention that some may be recommending that you repeal a bipartisan deregulatory measure that advances our goals of less government of and more freedom.

We urge you to preserve the member business-lending rule of the National Credit Union Administration (NCUA). In 1998, then-President Bill Clinton signed legislation that unwisely capped the amount of business loans credit unions may make to members to 12.25 percent of the credit unions’ assets. And Clinton’s regulations went beyond what the law requires to limit the loans credit unions may make to non-member businesses as well.

For years, many Center-Right groups, as well lawmakers such as Sen. Rand Paul (R-KY) and Reps. Darrell Issa (R-CA) and Bill Posey (R-FL), have supported bipartisan efforts to loosen arbitrary limits on business lending by credit unions.

In March of this year, the NCUA, with unanimous support from members of both parties, relaxed this rule so that the cap no longer applied to business loans outside credit unions’ membership. The new rule also reduces many burdensome paperwork requirements. But some bank lobbyists are pushing to rescind this rule, because they don't want their credit union competitors to be free of this red tape.

We recognize that America’s banks face enormous burdens from the Dodd-Frank mandates, burdens hat harm credit unions as well. But with regard to the NCUA rule, we urge you to reject the bank lobby’s overtures, and stand with the Center-Right coalition and American small business in supporting this deregulatory rule.

The big winners from this recent rule will be small business entrepreneurs— the real job creators responsible, according to several studies, for the bulk of net new jobs. Many of these entrepreneurs have a difficult time getting capital elsewhere.

According to Pepperdine University economist David M. Smith, “credit unions grant a greater percentage of business loans to small business owners” than banks do. Yet Smith finds that credit unions have overall success and failure rates for their business loans that are virtually the same as those of banks.

This rule would also advance your goals of strengthening domestic energy and manufacturing and helping veterans. Many prominent credits unions were formed by employees of energy companies and manufacturers such as General Electric, Chevron and Dow, and since two of the largest credit unions focus their efforts largely on military populations, veteran-owned businesses are also likely to reap particularly large benefits.

We urge you to give your full backing to this rule, as well as join many Republicans in Congress in supporting bipartisan legislation to further deregulate business lending by credit unions.


John Berlau Senior Fellow, Competitive Enterprise Institute

Lisa B. Nelson CEO, American Legislative Exchange Council (ALEC)

Grover Norquist President, Americans for Tax Reform

Norm Singleton President, Campaign for Liberty

Andrew F. Quinlan President, Center for Freedom and Prosperity

Adam Brandon President, FreedomWorks

George Landrith President, Frontiers of Freedom

Andresen Blom Executive Director, Grassroot Hawaii Action, Inc.

Heather R. Higgins President and CEO, Independent Women's Voice

Pete Sepp President, National Taxpayers Union

Eli Lehrer President, R Street Institute

Karen Kerrigan President & CEO, Small Business & Entrepreneurship Council

David Williams President, Taxpayers Protection Alliance

Here is a statement from then-Congressman Ron Paul in support of the Credit Union Regulatory Improvements Act, legislation that lessened the regulatory burdens on credit unions and allowed them to offer more services to their members and the public:

Congressman Ron Paul

Financial Services Committee Hearing on “The Need for Credit Union Regulatory Relief and Improvements”

March 6, 2008

Mr. Chairman, I applaud you for calling this hearing. The topic of credit unions is one which has been important to me and my district, but has taken on an even greater importance in recent months. With the financial crisis affecting banks resulting in a decrease in lending, credit unions can play an important role in alleviating the effects of the subprime crisis .

In order to ensure that credit unions can play this important role, this committee should pass CURIA, which is sponsored by Capital Markets Subcommittee Chairman Kanjorski and Mr. Royce. I am proud to have joined them as an original cosponsor .

The regulatory relief in CURIA will enable credit unions to better serve the more than 89 million Americans who are credit union members. One important issue is the ability of credit unions to diversify their investment options. CURIA would allow federal credit unions to invest in investment grade bonds and double the amount that federal credit unions can invest in credit union service organizations.

Another aspect which is of particular interest is that of enabling credit unions to cater to underserved areas. This would enable credit unions to offer their products and services to those people who either have never been served by or who are no longer served by other financial institutions.

Due to litigation by the banking industry, several credit unions in my home state of Texas have been told that they can no longer take on new customers in underserved areas, and are at risk of losing customers from further low-income areas due to the threat of future litigation.

At a time when many low-income consumers are in danger of foreclosure on their homes and feeing the squeeze of inflation when they receive their paychecks, the last thing we should do is to impose new regulations such as requiring credit unions to comply with the Community Reinvestment Act. We in Congress should be doing all we can to ensure that these consumers are not unduly restricted in their borrowing or refinancing options.

Consumers are best served in the marketplace by a multiplicity of sellers. Banks and credit unions each have unique products and services that they can offer to customers, and both banks and credit unions need to realize that the financial marketplace is not a winner-take-all affair.

Membership in a credit union and holding of a bank account or loan are not mutually exclusive activities. By reducing the regulatory burden facing credit unions and ensuring a level playing field, healthier market competition will ensue, allowing consumers access to the products and services they need.

In a time of market turbulence, liquidity problems, and less willingness to the lend on the part of banks, credit union regulatory relief can go a long way towards helping consumers in need. I therefore urge my colleagues to pass HR 1537, the Credit Union Regulatory Improvements Act.