CUNA Calls for CU MBL to Enter Discussion on Capital Creation (Misc News: September 21, 2011)
CUNA is encouraging the U.S. House Subcommittee on Capital Markets and Government Sponsored Enterprises to make an increase in the credit union member business lending cap a part of the discussion on capital creation.
Also, a West Virginia congresswoman who played an important role in the debit interchange debate said Wednesday that MBL would get a hearing before here House subcommittee sometime in October.
In his letter to Rep. Scott Garrett, R-N.J., chairman of the Capital Markets and Government Sponsored Enterprises subcommittee, and ranking Democratic Rep. Maxine Waters of California, CUNA President/CEO Bill Cheney said credit unions stand ready to help grow the country’s small businesses.
“One of the crippling blows to economic recovery over the last few years has been the significant decline in business lending by large and community banks,” Cheney said. “The banks blame their reduced business lending performance on a number of factors: regulator and examiner pressures, reduced demand and lack of capital. However, what is interesting about the banker excuses for not serving small businesses during the financial crisis is that while banks have turned their backs on many small business customers, credit unions have experienced growth in their business lending portfolios.”
Credit unions are asking Congress to raise the cap on member business lending from 12.25 percent to 27.5 percent. CUNA estimates that the change would inject $13 billion into the economy, leading to the creation of 140,000 new jobs, at no cost to taxpayers.
CUNA said that the only opposition to the bill has been from the banking lobby which claims that credit unions have an unfair advantage because of their tax exemption and because they are not equipped to handle business loans.
The letter pointed out that currently, credit union small business loans only amount to 6 percent of all depository institutions and even less with non-depository institutions and it said that if the cap is raised, CU small business loans will still only amount to 10 percent of all such loans. Since 1997, charge-offs for CU MBLs have averaged 0.23 percent, about a quarter of the rate for banks. In addition, CU small business loan charge-offs are lower than consumer loans, as well.
It is clear that credit unions have a history of safe and sound lending, have consumer demand for our products (as evidenced through our growth), and have a willingness to help small businesses owners weather the current economic situation,” Cheney concluded in his letter.
Click here to download Cheney’s letter.
Rep. Shelley Moore Capito, chairwoman of the House Subcommittee on Financial Institutions and Consumer Credit, said Wednesday that her panel will hold a hearing “sometime in October” on the legislation as it looks at ways to jumpstart the economy and create more jobs.
The West Virginia Republican made her announcement during a speech at NAFCU’s Congressional Caucus in Washington, but in a subsequent interview with Credit Union Times she said she still hasn’t decided whether to support the bill, which is sponsored by Reps. Ed Royce, R-Calif., and Carolyn McCarthy, D-N.Y.