WASHINGTON (9/21/11)--Noting that “one of the crippling blows to economic recovery over the last few years has been the significant decline in business lending by large and community banks,” the Credit Union National Association (CUNA) encouraged the House Financial Services subcommittee on capital markets and government-sponsored enterprises to add lifting the credit union member business lending cap to any discussion on capital creation. The letter was sent to subcommittee chairman Scott Garrett (R-N.J.) and ranking member Maxine Waters (D-Calif.) ahead of today’s hearing on "Legislative Proposals to Facilitate Small Business Capital Formation and Job Creation." CUNA in the letter said that while banks have blamed their reduced business lending portfolios on regulator and examiner pressures, a lack of capital, and reduced demand, “a lack of demand has not been an issue for credit unions, many of which have former bank customers seeking business loans after having lines of credit withdrawn by the banks.” In fact, many credit unions have experienced growth in their own business lending portfolios after banks have turned their backs on many small business customers. Some credit unions are being forced to curtail their lending practices as they near the 12.25% of assets cap on credit union member business lending. CUNA estimates that lifting the MBL cap to 27.5% of assets would inject more than $13 billion in new funding into the economy, at no cost to taxpayers, creating 140,000 new jobs in the first year after enactment. The only obstacle to further credit union business loan growth is banker opposition to lifting the MBL cap, the letter notes. The CUNA letter notes that credit unions have been engaging in safe and sound business lending since their inception in the United States more than 100 years ago, and adds that some of the first loans credit unions ever made were for business purposes. For the full letter, use the resource link.