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CU biz lending gets support from Obama administration markup coming
WASHINGTON (5/19/10)--The Obama administration voiced support Wednesday for raising credit unions' business lending capacity, and House Financial Services Committee Chairman Barney Frank (D-Mass.) said his committee would consider an administration proposal to that effect--in a markup--"fairly soon." The support and the congressional action were noted during a Tuesday
Click to view larger imageCUNA President/CEO Dan Mica (right), testifying before the House Financial Services Committee on small business lending Tuesday, told lawmakers that credit unions could do a lot for the U.S. economy if the statutory cap on member business lending was increased. To Mica's right is Paul Atkins, a member of the Congressional Oversight Panel and former Securities and Exchange Commissioner. (CUNA Photo)
hearing before the House Financial Services Committee on promoting lending to small business. Credit Union National Association (CUNA) President/CEO Dan Mica--who testified at the hearing (the only credit union representative)--said after the hearing that he welcomed the administration's support for raising the business loan cap for credit unions, and thanked Frank for taking up the administration's proposal. "In announcing that there would soon be a committee vote on credit union business lending legislation, the chairman was giving his committee members a heads up," Mica said. "We appreciate that, and will work with him for smooth consideration of this proposal. Credit unions can help the nation get back on its economic feet by having more capacity to make business loans." Gene Sperling, counselor to U.S. Treasury Secretary Timothy Geithner, told Frank that the Obama administration supports the negotiated member business lending (MBL) proposal--the first time the administration has publicly expressed its support. Additionally, for the first time publicly, an administration representative stated the specifics of an MBL proposal. Among them:
* Raise the current 12.25% MBL cap to 27.5% (higher than the 25% now in the House and Senate MBL bills); * To go to the higher cap, credit unions would need to be well-capitalized (current 7% net worth ratio). If they fell below 7%, they would need to stop making new MBLs; and * Credit unions would also need five or more years of MBL experience, would have to demonstrate sound underwriting, and have strong management and adequate capacity in place.
Frank told the members of the committee that he was “putting everybody on notice” that he plans to schedule a committee vote on MBL legislation “fairly soon.”
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