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Washington
Cheney to Congress CUs will help those ignored by banks
WASHINGTON (6/17/11)--As small business owners continue to be turned away by banks when they come in search of a loan, credit unions stand ready to pick up the slack and provide small businesses access to much needed credit without putting taxpayer funds at risk, Credit Union National Association (CUNA) President/CEO Bill Cheney said at a Senate Banking Committee hearing yesterday.
Click for slide show At the Thursday Senate Banking Committee hearing on a bill to increase member business lending (MBL) authority for credit unions, CUNA President/CEO Bill Cheney both made the credit union case in favor of helping the economy by providing more credit to the nation’s small businesses through a higher MBL cap and warded off banker attacks against the change. (CUNA Photo)
Cheney’s remarks were made at Thursday’s hearing on S. 509, legislation that would expand credit union business lending authority to 27.5% of total assets. Cheney, National Credit Union Administration (NCUA) Chairman Debbie Matz, and other credit union and bank representatives testified during the hearing. In a Thursday letter sent to all senators after the hearing, Cheney said it is disturbing that bankers seem more concerned with keeping credit unions from lending to small businesses than with helping small businesses themselves. Cheney during his testimony said that bank loans to businesses have fallen by 4% since March, while credit union business lending has increased by 5% during that same time period, he said. Banks have remained reticent to lend in spite of the federal government’s gifting them with $30 billion in taxpayer-funded small business lending incentives. Cheney contrasted the MBL cap lift proposal with these recent government-backed actions, saying that the cap lift is “a job creation proposal that would not cost the taxpayers a dime and would not increase the size of government.” While credit union business lending has been a major growth area, “credit unions have expanded their member business lending portfolios carefully and prudently,” Cheney added. The CUNA CEO said that the cap lift is a necessary change for smaller credit unions to become more involved in business lending. The additional income will allow credit unions that otherwise would not have participated in business lending to bring in personnel with business lending expertise and to establish the procedures, safeguards, and internal controls needed to run a business lending program, he added. “The cap is a reason that so few credit unions do business lending,” he added. CUNA has estimated that lifting the cap would inject $13 billion in funds into the economy, creating over 140,000 new jobs. S. 509 had 19 co-sponsors at press time, including Senate Majority Leader Harry Reid (D-Nev.). Fellow co-sponsor Sen. Charles Schumer (D-N.Y.), in a statement submitted for the hearing record, called the cap lift a “commonsense way to immediately increase the amount of credit available to small businesses.” A House version of MBL cap lift legislation was introduced earlier this year by Reps. Ed Royce (R-Calif.) and Carolyn McCarthy (D-N.Y.), and that bill has 38 total co-sponsors. The Competitive Enterprise Institute’s John Berlau and the Heartland Institute’s Eli Lehrer also called the MBL cap lift bills “a step in the right direction,” adding that “current rules preventing credit unions from lending more than 12.25% of their assets to businesses make no sense.” For more on the hearing and CUNA’s letter to Congress, use the resource links.
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