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CUNA to Congress MBL restrictions harm job growth
WASHINGTON (3/1/10)--Restricting credit union business lending “does a great disservice to business owners everywhere, and stymies job growth,” St. Mary's Bank CU President/CEO Ronald Covey told assembled lawmakers on Friday.
Click to view larger image Testifying on behalf of CUNA, Ronald Covey said his credit union and others should be able to put more money back into their communities through increased member business lending. (CUNA Photo)
Testifying on behalf of the Credit Union National Association (CUNA) before both the House Financial Services Committee and Small Business Committee, Covey said that his credit union does not “see a scarcity of credit-worthy business borrowers.” Rather, he said, given the demand that his credit union faces for loans, “it is difficult to understand why” his credit union “should not be able to put more money back into the community, into the hands of hard working business owners, so they can employ more people and create more opportunities.” The hearing, which took up much of the workday on Friday, centered on the condition of small business and commercial real estate lending and featured testimony from regulators, small business owners, and lenders. In his testimony, Covey said that lending to members who own small businesses is a central part of credit union business practices. Covey said that his credit union has an average loan size of under $200,000 and currently lends a total of $75 million in funds through 959 member loans. However, Covey added, with 2,201 members who own small businesses, the potential amount of loans that could be made by his credit union is “much greater.” According to CUNA estimates, lifting the member business lending cap to 25% of a credit union's assets would result in $10 billion in new capital for small businesses and could potentially create as many as 108,000 new jobs within one year. Further, CUNA estimates that 60% of the business loans in credit unions affected by the current statutory cap are in credit unions that are within one month to three years of having to sharply curtail business lending because of the cap. Regulators also addressed credit union concerns during an earlier panel, with Treasury Assistant Secretary for Financial Stability Herbert Allison saying that the Treasury intends to continue its ongoing dialogue with credit unions and the National Credit Union Administration in order to better understand the needs of credit unions. Commenting on the hearing, CUNA Senior Vice President of Legislative Affairs John Magill said, "This was a good vetting of member business lending issues for credit unions. The lawmakers did not question, not did the bankers dispute, the facts that more business lending by credit unions to their members is good for the country--good for the economy." Also at the hearing, U.S. Small Business Administrator Karen Mills said that her organization is discussing the expansion of its Community Development Financial Institution (CDFI) programs with both individual CDFIs and the U.S. Treasury.
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