American Bankers Association Chairman-elect Albert Kelly recently offered testimony before Congress against passage of House Resolution 1418, which would allow certain credit unions to more than double their member business lending cap to 27.5 percent of assets.

We understand where Kelly’s opposition comes from. And we understand that it is his duty to protect his membership’s interests.

But what we don’t understand is why he chose to recycle and massage such tired, ineffective and borderline propagandist arguments against what is, at this point, simply an idea.

Kelly argued that credit unions can already make "all the business loans they want under $50,000" without said loans counting against their cap. But woe to the business member seeking a $50,001 loan from a credit union already at its 12.5 percent limit.

Kelly also argued that business lending is inherently risky, saying that, "As credit unions have aggressively pursued business lending options, business loan delinquencies have risen and some credit unions have failed." Here, he is also correct.

Then again, how many of his member banks have also failed or are struggling because of rising business delinquencies and bad bets? The cruel reality of our current economic slump does not discriminate between credit union customers and bank customers. Both have succumbed to poor decisions and bad luck these past few years.

Kelly testified that expanding the business lending cap would increase the federal debt – loans underwritten by tax-exempt credit unions would naturally generate less in taxable revenue.

Arguing against increasing the debt is political gold these days, and his point makes sense – if one were to completely discount the new tax revenue generated by the increased sales and new job opportunities that generally accompany small business growth.

Kelly cited a 2010 Congressional Budget Office study that found increasing the credit union business lending cap would increase the deficit $354 million over 10 years. We’re sorry, but in 2011, real money is measured in billions, if not trillions, and isn’t $354 million over 10 years kind of a drop in the bucket? And do we need to mention the $30 billion Congress has already set aside this year alone to try and goose banks’ small business lending?

Lastly, and perhaps most laughably, Kelly urged those credit unions seeking a bigger piece of the business lending pie to consider conversion to a mutual bank charter. It’s a funny twist on the old "if you can’t beat ’em, join ’em" refrain, but given added weight these days.

The Treasury Department has all but admitted it barely understands mutuality. Given that backdrop, why would any sane credit union want to consider mutuality? So they could pay more taxes and have the same amount of access to federal cash – which is to say, none at all?

We’re not saying that H.R. 1418 is a perfect bill, or that all of Kelly’s objections to it can or should be so easily dismissed. His concerns regarding the ineffectiveness of the NCUA, the main credit union regulatory body, have been echoed in our own reporting. And more than doubling the business lending cap from 12.5 percent to 27.5 percent, seemingly overnight, looks like an excessive leap forward into unknown territory for credit unions.

But we think HR 1418, while imperfect, could be made less so. Negotiate the proposed cap increase down to, say, 17.5 percent, and see how that works. Mandate that the relative handful of institutions eligible for the new cap be required to pay more into the credit union safety insurance fund. Impose a stricter regulatory regime than the seemingly ineffective NCUA currently in place. Regulate credit union service organizations, and demand more transparency and more accountability.

The simple fact is, businesses need more borrowing options these days, not fewer. Spouting recycled and blatantly one-sided arguments out of a blind duty to guard the gate won’t help anyone.