WASHINGTON (4/24/13)--The Credit Union National Association Tuesday submitted a letter for the record of a House panel hearing entitled "Broken Promises: The Small Business Lending Fund's Backdoor Bank Bailout," and charged that the SBLF was "a sweetheart deal to further assist banks that were aided in TARP."
CUNA President/CEO Bill Cheney, in the letter to the key members of the House Oversight and Government Reform Committee, which conducted the hearing, underscored that banks used the funds from the second government bailout to pay off costs tied to their first bailout, rather than using those funds for their intended purpose of lending to struggling small businesses.
The $30 billion SBLF program was established by the Small Business Jobs Act of 2010.
Banks and their national trade associations vigorously pushed for enactment of the SBLF, but those same supporters have yet to admit that the SBLF "has done little to stimulate bank lending to small business," Cheney noted.
The CUNA letter went on to note that legislation that could help credit unions do more to aid the economy is active in the U.S. House.
Rep. Ed Royce's (R-Calif.) bill, the Credit Union Small Business Jobs Creation Act (H.R. 688), would increase the member business lending (MBL) cap to 27.5% of assets, up from the current 12.25%. CUNA estimates the change would help credit unions lend an additional $14.5 billion to small businesses in just the first year after enactment. This money, which would be made available at no expense to taxpayers, would in turn help small businesses create around 158,000 new jobs. Royce's MBL bill has 89 co-sponsors.
"We know the banks oppose H.R. 688; but considering how they have used the taxpayer-subsidized SBLF, their opposition to this legislation is a pretty good reason to support it," the letter said.
Credit union lending to small business owners increased by 45% during the financial crisis, while bank small business loans contracted 15% over that same time period, CUNA noted. This favorable comparison "should speak volumes of what small business should expect" if Congress allows credit unions to increase their lending support, the letter said.
"Credit unions were there for small businesses when the banks, with taxpayer backing, abandoned them; and if Congress permits it, credit unions will continue to be there for small businesses during the recovery."
For the full CUNA letter to Congress, and to read about a recent Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) report that said the U.S. Treasury invested only $4 billion of the $30 billion in SBLF funds that were available, use the resource links.