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CU System
Dallas editorial Free CUs from low MBL cap
DALLAS (7/7/10)--The Dallas Morning News called for lifting the 12.25% of assets cap on credit union member business lending (MBL), saying, “Congress would be wiser to give credit unions broader authority to make the small-business loans that banks aren’t making.” Raising the cap is a solution that doesn’t involve taxpayer funds, the newspaper said in a Friday editorial, adding that Congress must let credit unions fill the lending void left by banks. The editorial addressed the typical argument coming from banks: “Predictably, bankers oppose the change, which they contend would encourage ill-advised loans and give the tax-advantaged, member-based credit unions an unfair advantage,” said the newspaper. “Not only is this argument disingenuous, coming from an industry still reeling from its own bad lending decisions, but it also threatens to stymie a valuable alternative for cash-starved small businesses.” The editorial then counters the bankers’ argument: “Despite bankers’ claims, credit unions aren’t a threat to their prosperity. Last year, credit unions held $36 billion in small-business loans, less than 5% of all such loans. Even if most credit unions reach the 25% cap, banks would still have more than 90% of the small-business market. And the only reason there is a cap today is that credit unions lost a lobbying battle with bankers 12 year ago.” The Credit Union National Association (CUNA) has asked credit unions and their small-business members to contact their legislators and ask them to support raising the cap. NOTE: Credit unions and CUNA are lobbying to increase the cap to 27.5% of total assets. Sen. Mark Udall (D-Colo.) last week introduced an amendment to a small-business stimulus bill that would raise the cap. See related Washington News item in News Now, "CUNA's Cheney to CUs: Keep the volume upon interchange, MBLs." To read the editorial, use the link.
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