MADISON, Wis. (12/1/10)--If the credit union member business lending (MBL) cap was raised, the needs of small businesses could be better met, Bill Hampel, chief economist for the Credit Union National Association, told Marketplace radio Monday. Hampel made his comments as one of several people interviewed in a segment about AFRA-SAG FCU in Burbank, Calif., because the credit union decided to ask some of its high-dollar depositors to consider withdrawing their funds. Hampel explained the credit union’s rationale for the request. “In normal times what they would do is, they would just take the funds that were not being loaned out and invest them,” Hampel told Marketplace. “But right now, interest rates on short-term investments are essentially very close to zero, so there's not much they can do with the money.” Asking members to withdraw money is unusual, because typically a credit union might lower interest rates to discourage customers from depositing too much, Hampel added. Credit unions have been working for years to be able to lend more money to small businesses, Marketplace noted. Federal regulatory reform regarding limits on credit unions’ MBL would help the economy, Hampel told Marketplace. “We feel that we should be allowed to have something more than 12% of our assets in business loans,” Hampel said. “And the bankers would prefer that we stay at this limit, even if some of them are unable to meet all of their small-business loan demands.” Credit unions are seeking to get the MBL cap lifted to 27.5% of total assets. To read the interview transcript or hear the audio file, use the link.