HIGHTSTOWN, N.J. (12/12/12)--In the wake of Hurricane Sandy, credit unions' push to raise their member business lending (MBL) cap and their opposition against banks' efforts to extend the Transaction Account Guarantee (TAG) unless married with MBL provisions have taken on new meaning for credit unions in New Jersey.
So wrote New Jersey Credit Union League President/CEO Paul Gentile in a column entitled "Many Small Businesses Left Crippled in Sandy's Wake; MBL Cap Increase Could Spur Recovery" in CUinsight (Dec. 11).
Gentile noted that banks have no problem lobbying against raising credit unions MBL cap to 27.5% of assets from the current 12.25% while at the same time many avoid low-dollar business loans that credit unions thrive on.
"Here in New Jersey, we often see banks refer small dollar loans to credit unions. And vice versa, credit unions refer big dollar business loans to local banks. There's nothing wrong with that. That's good for the community." He said the banks' message on Capitol Hill "doesn't reflect what's happening on the ground."
"For us here in the great state of New Jersey, the hypocrisy of the banks' arguments against raising the MBL cap is particularly galling," he wrote.
"We will be dealing with the aftermath of Hurricane Sandy for many years, and there are thousands of small businesses on the New Jersey Shore and inland that have been devastated," Gentile wrote. "They need credit to get their businesses back up and running. Insurance policies have limits. FEMA caps out. These businesses need capital to get back in shape. In many cases the dollar amounts will be $200,000 and below. New Jersey credit unions are ready, willing and able to meet this need, but the cap looms and acts as a governor to small business growth," he continued.
To strongly oppose the new bank bailout while supporting MBL reform, Gentile said, credit unions must focus on their strong point: their structure and what it means to the member (value).
Gentile suggested continuing to tell the credit union story to lawmakers and change the arguments from what the agenda means for banks and credit unions, to what it means for consumers and businesses.
"Credit unions are good for consumers, small business and the overall economy," he said. "Anyone who argues against that is more worried about the bottom-line than spurring the economic growth the country so sorely needs."
The Credit Union National Association and the nation's credit unions are urging Congress to raise the MBL cap so they can inject $13 billion in new small business loans into the economy. Raising the cap would help create 140,000 new jobs in the first year, at no expense to taxpayers.
See related News Now story, "CUNA urgest CUs: Continue to oppose stand-alone TAG bill."
To read the full column, use the link.