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Michigan Credit Union League Home » Information Services » Publications » News Articles  

Bank Profits Grow, But Small Business Loans Continue Decline, Showing Need for CU MBL   (Misc News: February 29, 2012)

Banks’ profits are continuing to grow, but are they are still restricting loans to small businesses, pointing to a need to raise the member business lending cap for credit unions, according to a CUNA economist.

Commercial banks and savings institutions insured by the FDIC reported an aggregate profit of $26.3 billion in the fourth quarter of 2011, a $4.9 billion improvement in net income compared to the same quarter in 2010, according to CUNA News Now.

This marks the 10th consecutive quarter that banks’ earnings registered a year-over-year increase, but Mike Shenk, CUNA’s vice president of economics and statistics, said the record profits have so far not resulted in increased capital for small businesses.

While bank profits soared, FDIC data shows that U.S. bank small business lending continued to decline in the fourth quarter and that year-over-year small business loans by banks declined nearly 5 percent, Shenk said.

"It's great that the banking system is inching its way back from the abyss, but small businesses don't seem to be benefiting," he added. "In contrast credit unions have been lending to small businesses throughout the crisis and ensuing weak recovery, but many are now bumping up against the arbitrary 12.25 percent member business lending cap. The FDIC data make it clear: the time is now for Congress to pass MBL cap increase legislation."

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