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CU System
WABC radio interviews CUNAs Hampel on MBLs
NEW YORK and WASHINGTON (4/5/11)--In an interview on WABC Radio in New York Saturday, Credit Union National Association (CUNA) Chief Economist Bill Hampel provided information about credit unions' role in small business lending, discussed raising credit unions' member business lending (MBL) cap, and warned about the impact of interchange on consumers. The interview was on "The Small Business Authority Hour," hosted by Barry Sloane, CEO/president/chairman of Newtek Business Services, The Small Business Authority, which sponsors the program. Also on the program was co-host Laura Smith, and Michael Minerva of Capital One. Hampel first explained the credit union difference and educated listeners about credit unions, then moved on to the topic of the hour. Fifteen years ago, credit unions had few MBLs--about $2.5 billion, Hampel said. "Now it's a major growth area for credit unions," he said, adding credit unions today loan about $40 billion. Small business loans are "their fastest-growing loans." He noted that regulations and restrictions have meant that "a lot of businesses are looking for new loans." When asked about the regulatory cap on MBLs, Hampel responded: "It is ironic--credit unions didn't have a cap for their first 80 years, not until about 15 years ago. Then, when we get a limit [imposed], the loans start going up." He noted a bill in the Senate proposes to lift the cap to 27.5% of assets from 12.25%, which would "allow credit unions the flexibility to meet the needs of small borrowers. Credit unions are telling us that they have had to slow down (business lending)--not because they don't have the money but because they're bumping into the cap," he said. After the cap is lifted, credit unions can generate $10 billion-$11 billion worth of business loans, he said. "And that's without tax subsidy, without a bailout," said Sloane. "Yes. It's a deficit-free stimulus," Hampel responded. Hampel also explained what would likely happen if the Federal Reserve's proposal to limit interchange fees progresses. Consumers will be charged more for using their cards and "will likely not use the cards." "Financial institutions--banks and credit unions--need profits to stay in business. If that source of revenue goes away, they have to make it up and regulators will force them to make up the revenue," he said, adding "Free checking is an endangered species." Also, "consumers could likely see per-transaction fee on each debit card transaction." To listen to the interview use the link. The Small Business Authority, powered by Newtek is a CUNA Strategic Services provider.
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