NEWARK, N.J. (8/22/11)--Credit union leaders from New Jersey got a chance to provide Federal Reserve Bank of New York CEO William Dudley with information about the economic challenges they face during a private luncheon Thursday in Newark. The luncheon was attended by 150 business and credit union leaders, including New Jersey Credit Union League President/CEO Paul Gentile. Speaking to the group, Dudley said it's unlikely that the nation will fall back into a recession (The Daily Exchange Aug. 19). "This was a great opportunity to hear directly from Mr. Dudley on what the Fed sees happening with the economy going forward and what role it is playing," said Gentile. "He was clear that the Fed believes the economy will perform better in the second half. It was also an opportunity for him to hear directly from New Jersey credit union leaders on the challenges they are facing. Our credit unions in attendance did an excellent job in providing Dudley with real-world, hands-on insight into their current challenges," Gentile added. Some of those challenges included difficulties with the appraisal process given the loss in value to homes, the need to raise the cap on credit unions' member business lending, a lack of lending opportunities, and others. Dudley and his team encouraged credit union leaders to remain in contact with the Fed on these and other issues, said the league. Dudley discussed several topics related to growth and recovery from the economic crisis, including the role of bank examiners, who scrutinize bank lending practices. The examiners, he said, try not to "let the needle swing too far over to conservative in terms of lending practices." "We have been very clear that we do not want to impede the ability of banks to make good solid loans to businesses," he added. Dudley reported that in a survey in May of small businesses, more than two-thirds reported stable or increased sales in first quarter, up from 50% last year. When asked about their future outlook, while the majority of business owners--56%--were neutral. Many more said they were optimistic--27%--rather than pessimistic--7%. Reluctance by businesses to expand was a hindrance to growth, Dudley said, noting he believes a double-dip recession is not in the future. "Major sectors of the economy that normally pull the economy down into a recession are already down," he said, adding, "it's much harder for them to go down further." He noted that New Jersey has a highly diverse economy, with more than 40% of those over age 25 in the state having a college degree. New Jersey is "well-positioned for growth," Dudley added. Credit unions, the leagues and the Credit Union National Association (CUNA) are pressing Congress to raise credit unions' member business lending cap to 27.5% of assets from 12.25% by supporting the Small Business Lending Enhancement Act (H.R. 1418 and S. 509). Doing so would add $13 billion in new small business loans and create 140,000 jobs with no cost to taxpayers, CUNA says. CUNA has urged credit unions to reach out to their legislators while lawmakers are in their home districts during the August congressional recess. For more information, see CUNA's Action Alert link.