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CUNA blankets Capitol Hill with MBL letters
WASHINGTON (2/4/10)--Responding to the Obama administration’s recent decision to funnel $30 billion of unspent Troubled Asset Relief Program (TARP) funds into smaller banks for business lending, Credit Union National Association President/CEO Dan Mica said that “there is no good public policy reason to deny credit unions greater capacity for making business loans to their members, while at the same time giving community banks a subsidy to do so.” Under the Obama administration’s plan, which was released on Tuesday, the TARP funds would be available as capital investments for community banks, pending congressional approval. The majority of credit unions would not be eligible for these TARP funds, as the Federal Credit Union Act defines capital as only the retained earnings of the credit union. In a letter sent to all members of Congress on Wednesday, Mica said that credit unions do not oppose the subsidy for the banks out of hand – but they do question not including credit unions in proposals to foster more business lending. Mica added that pending legislation in the Senate and House, which would raise the cap on credit union business lending to 25 percent of total assets “could provide up to $10 billion in new loans to small businesses and create as many as 108,000 jobs – without costing the taxpayers a dime, or increasing the size of government.” “Credit unions’ impediment to additional small business lending is not the need for more capital but an arbitrary statutory limit on business loans of 12.25% of their total assets,” Mica said, adding that they “do not need the taxpayer assistance to do more business lending because, unlike some banks, credit unions remain generally well capitalized.” For the full letter to Congress, use the resource link.
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