WASHINGTON (3/2/10)--Credit unions feel “hamstrung” by the current member business lending cap of 12.25% and can help more of their members while creating 100,000 new jobs if Congress raises it, Credit Union National Association (CUNA) Chief Economist Bill Hampel told Fox Business Network in a live interview Monday. Hampel said that credit unions are “quite willing and able to make loans, but more and more they are having to slow down their lending because of this cap.”
“We’re seeing more and more small businesses who are being turned down for credit” by their banks. Hampel was invited to do the Fox interview after USA Today on Monday ran a prominent story on the reasons CUNA and credit unions are pushing to raise the MBL cap (see related News Now headline story). Hampel told Fox there is no public policy reason against lifting the MBL cap. “Credit unions have a history of making these loans safely” with a loss rate that is a fraction of the bank loss rate on the same types of loans. Opposition to lifting the MBL cap “is not a safety and soundness issue.” Rather, Hampel said, the main “pushback” that credit unions are getting “is from the banking industry who don’t want any competition for their lending,” Hampel said. Banks have no cause to object, Hampel argued. Credit unions now have about 5% of the small business loan market; doubling that by raising the MBL cap would give credit unions 10%, still leaving the banking industry dominating the market with 90% share. According to CUNA estimates, lifting the member business lending cap to 25% of a credit union's assets would also result in $10 billion in new capital for small businesses and could potentially create as many as 108,000 new jobs within one year. Further, CUNA estimates that 60% of the business loans of credit unions affected by the current statutory cap are in credit unions that are within one month to three years of having to sharply curtail business lending because of the cap.