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ACI op-ed MBL cap inhibits competition hurts small business
WASHINGTON (4/30/12)--American Consumer Institute (ACI) Center for Citizen Research President Steve Pociask, in an editorial published in The Hill last week, said the only "unlevel playing field" in the fight between credit unions and banks regarding increased member business lending (MBL) is that credit unions are subject to an MBL cap that prevents them from lending to small businesses.

He said the banks' cry of an "unlevel" playing field is just "weak and disingenuous lobby-speak." Pociask also noted that compared with banks, credit union lending produces a third of the delinquency rate and bad debt. Current law limits the amount credit unions can loan to business-owning members to 12.25% of the credit union's total assets. "This is unfortunate since, compared with banks, credit union lending produces a third of the delinquency rate and bad debt," Pociask said.

Keeping the MBL cap in place also "maintains an economic barrier to entry that protects near-monopoly status for banks that collectively control 95% of small business lending," Pociask said. "In other words, the arbitrary cap on credit union lending is a regulation that inhibits competition and protects competitors (the banks)," he added.

Legislation that would increase the MBL cap to 27.5% of assets has been introduced in the House and Senate, and Senate leadership remains committed to a vote on their version of MBL legislation. Rep. Ed Royce (R-Calif.), who is an original cosponsor of House MBL legislation, has said he would push for a vote on his bill once Senate action is complete. "Public policy needs to encourage competition, remove market entry barriers, encourage investment— and do all of this without government funding," Pociask said, adding that the MBL cap increase would mean "more loans at lower market risk."

Pociask also wrote in favor of the MBL cap bills in a blog post last week. (See related April 26 News Now story: MBL increase brings choice, credit access: ACI blog) CUNA is encouraging credit union supporters to ask their elected representatives to support MBL cap increase legislation during this current weeklong congressional district work period. (See related News Now story: In-district MBL advocacy key this week: CUNA) For the full editorial, use the resource link.
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