I would like to thank you for inviting
me here today.
I want to say a special thank you to Dan Mica, John McKechnie
and Moira Hampton for all of their hard work and assistance
over the years. It has been a real pleasure to work with
you.
And we have accomplished a lot together. Like you, I
represent many working class Americans in my district.
They rely on me, both as a community and government leader,
to act as their voice and represent their interests as
taxpayers.
In much of the same way, you have represented the core
foundation of this country’s economic values –
a strong working class that wanted the best investment
value for their money. And you knew what Americans wanted
out of their financial institutions - - because credit
unions were founded by working class Americans.
Credit unions became the great equalizer in American
society. Indeed, their history mirrors both our growth
as a nation and our strength as a people. Throughout the
last 65 years, they have been a widely recognized part
of the American financial culture.
For example, following the end of World War II, it was
your institutions that helped found new communities through
a host of consumer loans.
In fact, consumer loans have been the core mission of
credit unions. They have been the financial fuels that
powered new car purchases and paid for the lumber that
has built thousands of new homes. They have served as
that critical economic anchor for many communities across
this country.
And you have never wavered from this primary mission
- - - acting as the financial partner to thousands of
cities and towns. Credit unions aren’t your normal
financial institution.
Their strength is based in those communities and in their
members - - - who are as diverse as the very image of
America itself. From construction workers and teachers
- - - to doctors and lawyers, credit unions have become
their symbol - - - and source - - - of financial strength.
Today, credit union membership has soared to almost 80
million, with assets exceeding $445 billion. Credit unions
are also becoming an important source of financial services
to some sectors of the nation’s small business community.
While the history of our nation’s true community
based financial institutions serve as a beacon to our
past - - - they are also a roadmap to our future. And
that is what we are here to talk about today - - - what
credit unions mean for America’s future.
As a Senior Member of the House Banking Committee AND
as the Ranking Democratic Member of the House Small Business
Committee, I have a unique perspective about how you -
- - the definitive community partner - - - can now act
as the definitive economic development partner.
You might wonder exactly how credit unions can enter
into the economic development sector.
One potential entry area is retirement planning.
As many of you may know, pension participation in small
businesses lags far behind those in larger firms.
Many smaller companies lack the necessary resources to
both start and manage a pension or retirement plan. As
a result, many small business workers - - - particularly
those at a certain career point or those with young families
- - - are forced to leave these small, promising companies
in order to secure a benefits package that includes a
comprehensive 401K or similar retirement plan.
As a result, without a pension plan in place, small businesses
have had an even harder time competing with big business
in recruiting and retaining quality employees.
And despite recent changes designed to make it easier
for small businesses to establish a pension plan, workers
in firms with fewer than 100 employees are only about
half as likely as employees in larger firms to be included
in an employer-sponsored pension or retirement savings
plan.
The number of American small business employees without
a pension plan is staggering. Over 40 million Americans
are employed in businesses with 100 or fewer employees,
and only 8 million of them are earning pension benefits.
One of the big reasons for this is that under current
law, it is twice as expensive for a small business to
set up a pension plan or a retirement plan than it is
for a big business.
Accordingly, you and I must accept the leadership role
in advocating for pension reform and the expansion of
IRAs, 401k’s and other retirement and savings vehicles.
We are in need of policies that provide incentives to
workers and consumers to save - - - thus helping to build
a strong financial foundation for the future. In doing
so, they will be doing their part to strengthen the future
prospects of the American economy.
On the Small Business Committee, we are also concerned
about another critical aspect of community economic development.
I have always believed that "access to capital is
access to opportunity."
What I mean is that the success of any new business is
based primarily on its ability to access growth capital.
For many small businesses, that access is simply not there.
Larger institutions are forced to focus on opportunities
with more immediate returns.
Community development credit unions have traditionally
made smaller loans and operated in communities where larger
commercial lenders generally do not make loans. They know
how to make the kinds of loans that will actually help
small businesses. They know how to work with borrowers
to improve their chance of success. And the fact is, credit
unions know the economic development needs of their communities.
And, more importantly, they are determined to see these
economic anchors take root and flourish.
The perfect vehicle for planting the seeds of economic
development is through the Small Business Administration’s
Preferred Lenders, otherwise known as the 7(a) Loan Program.
This is one of SBA's primary lending programs. It provides
loans to small businesses unable to secure financing on
reasonable terms through normal lending channels. The
program operates through private-sector lenders that provide
loans which are, in turn, guaranteed by the SBA.
The question is - - - why aren’t credit unions certified
as 7(a) Lenders through the SBA?
In fact, this sounds like a perfect combination to help
spur community economic development. Well, you are exactly
right - - it is a perfect combination.
Because the 7(a) Program’s mission parallels the
longstanding mission of America’s credit unions.
As the credit unions are the anchors for the consumer
sector, the 7(a) program helps to provide a financial
foundation for new small businesses.
And much like credit unions, the 7(a) Program fulfills
its mission by offering opportunity to those unable to
secure financing on reasonable terms through larger financial
institutions.
Through my work with credit unions in my home state of
New York, I have worked to bring the 7(a) opportunities
to your institutions. Chris Revere from the New York State
Credit Union League, and Jeff Rodman from Actor’s
Federal Credit Union, sat down with me to discuss how
their financial institutions could find a way to work
with the SBA to offer access to capital opportunities.
While hashing out a lot of ideas, we with the idea of
having SBA offer credit unions the opportunity to become
7(a) lenders.
I immediately got to work by contacting key SBA officials
who had initially expressed reservations about the idea
because they thought it was simply unworkable in its current
form. Despite its initial reluctance, the SBA came on
board after a series of discussions about how this could
work.
Following that, we approached the National Government
Guaranteed Lending Association, which represents 7(a)
lenders throughout the country. We discussed how this
new partnership would benefit the 7(a) lenders - - - and
how it would increase the ability of small businesses
to access the program.
The end result was a comprehensive Memorandum of Understanding
from the Small Business Administration that today allows
credit unions to participate in the agency’s flagship
loan program.
Authorizing credit unions to make SBA-backed loans, will
provide access to capital for small businesses in many
of America’s forgotten communities.
And in the period since the 7(a) Loan and credit union
partnership has been in effect - - - the number of community
development credit unions approved to make SBA-backed
loans has increased from 7 to 43.
I applaud the SBA, the 7(a) trade associations and your
institutions for entering into this agreement. While this
partnership meant moving into uncharted territory, it
has worked out well for everyone - - - especially credit
unions.
I want to assure you that I will take a keen interest
in this partnership and I will be monitoring its progress
throughout the 107th Congress.
In closing, I believe that this is not just the beginning
for you in the community and business development sector
- - - it is, in fact, a logical progression of your history.
Credit unions were the saviors of this country during
some of its darkest hours, when our financial future was
in doubt and hope - - - as well as money - - - was truly
in short supply.
You are a pillar of many communities throughout this
nation. You are the hometown financial institution they
rely on - - - not just as a place to deposit a paycheck
- - - but a long-term financial partner. By providing
greater economic security for the small companies and
their employees through pension and retirement plans,
you have invested in the present - - - and in the future
- - - financial health of your Members.
And now, hopefully, you will be the new business builder
with the community by helping entrepreneurs realize another
part of the American dream - - - business ownership. I
look forward to working with to making this dream a reality
in the very near future.
I am - - and will continue to be - - - your partner in
the federal government. As a Member of the House Banking
Committee and as the Ranking Democratic Member of the
House Small Business Committee, I look forward to continuing
our work to build a better future for our nation’s
credit unions and the cities and towns across America
that they call home.
Thank you.
