CUNA urges President Obama – support no biz lending cap on CUs

October 22, 2009

FOR IMMEDIATE RELEASE
Contact: Patrick Keefe, CUNA Communications (202) 508-6765
pkeefe@cuna.com

CUNA urges President Obama – support no biz lending cap on CUs

As part of President Obama’s initiatives to help small businesses, credit unions are urging him to also support increased member business loan authority for credit unions.

While business lending at all banks has declined by more than 8 percent, credit unions have posted business loan growth of 14 percent over the same 12-month period ending in June of this year, CUNA has told President Barack Obama in a letter.

“That is because small business members are turning to their credit unions for loans because they cannot find credit elsewhere, including at banks,” CUNA President and CEO Dan Mica wrote. But, he quickly added, this growth cannot continue under current statutory restrictions of a “cap” on business lending by credit unions.

Mica noted that if the cap were to be eliminated, an estimated $10 billion could be provided in new small business loans.

“I believe the Administration and Congress should support small business and take steps to ensure credit is available to them which will promote oncoming recovery,” Mica wrote. “With all due respect, however, an important element is missing. That is, support for increased member business lending at credit unions -- a step that would boost our economy as well as help local communities through the country.”

The complete text of the CUNA letter to President Obama follows:

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October 22, 2009

The Honorable Barack Obama
President of the United States
The White House
Washington, DC 20500

Dear Mr. President:

On behalf of the Credit union National Association I am writing to you following your announcement yesterday to encourage more loans to small businesses and to thank you for inviting me to attend the ceremony. The Credit Union National Association is the nation's largest credit union advocacy organization, representing about 90% of the nation's approximately 8,000 state and federal credit unions that provide loans and savings accounts for 92 million members, which include small businesses.

Much of your focus today was on community banks. Yet as the data show, growth in business lending at those banks is almost imperceptible and has actually declined at all banks by over 8%. Credit unions, however, have a different record on member business lending (MBLs). These loans at CUs grew by 14% for the 12-month period ending in June of this year. That is because small business members are turning to their credit unions for loans because they cannot find credit elsewhere, including at banks.

However, this growth cannot continue because of the statutory cap on credit unions' aggregate MBLs. Credit unions have a ceiling on the amount of member business loans they can make -- 12.25% of total assets -- despite very low MBL loss rates. We estimate that if the cap is eased, approximately $10 billion could be provided in new small business loans.

Mr. President, I urge you - as part of your current initiatives to help small businesses -- to support increased member business loan authority for credit unions.

Your message stated that the Treasury Department will be working to implement your initiatives, including increased loan limits for key SBA programs. We wholeheartedly support that and would like to work with the Treasury Department, SBA and Congress to achieve higher limits for key SBA programs, such as 7(a) and 504 programs today. You also announced an upcoming small business conference. I urge you to include credit unions as an important partner in meeting the lending needs of small businesses.

I believe the Administration and Congress should support small business and take steps to ensure credit is available to them which will promote oncoming recovery. With all due respect, however, an important element is missing. That is, support for increased member business lending at credit unions -- a step that would boost our economy as well as help local communities through the country.

In closing, I wish you all the best and thank you for your attention to this very important issue.

Sincerely,

Daniel. A. Mica
President & CEO
Credit Union Natl. Assn.
Washington, DC

cc: U.S. Treasury Secretary Timothy Geithner
SBA Administrator Karen Mills
NCUA Chairman Debbie Matz
U.S. Treasury Assistant Secretary for Financial Institutions Michael Barr

Copyright © 2009 - Credit Union National Association, Inc.