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Cheney touts CU issues on iCNN Moneyi
WASHINGTON (8/31/11)--In a CNN Money interview segment titled “Credit unions keep perks, banks won't,” Credit Union National Association (CUNA) President/CEO Bill Cheney underscored the differences between credit unions and banks and why credit unions continue to offer consumers the best deal in financial services. Anchor Poppy Harlow, noting that banks “across the board” are raising fees and cutting benefits to customers while credit unions are not doing the same to members, asked Cheney if the credit union approach is “a sustainable model.” The CUNA CEO answered “absolutely,” and explained that while banks are driven to deliver profits to stockholders, credit unions are responsible to their member-owners. Noting that he headed a credit union before he became a trade group CEO, Cheney said he knows first-hand that a credit union will do anything it can to help its members, especially in hard economic times. Cheney dispelled a notion that banks are hindered from providing consumer benefits because of their high capital standards. Cheney explained that, in fact, credit unions have higher capital requirements than banks, and fewer avenues to fulfill those requirements. While banks have alternative sources of capital, credit unions must rely on retained earnings to meet their higher requirements. Asked about the impact on credit unions of the Dodd-Frank financial reform law, Cheney responded that CUNA is concerned about and working to reduce the regulatory burden on credit unions. “We’ve been very vocal with the CFPB (Consumer Financial Protection Bureau) and leaders here in Washington,” he said. “If you want to simplify, you have to peel back the onion and get rid of old and conflicting regulations…so we’re not simply layering new regulation on top of old.” Also during the segment, Cheney made the case for an increase in the credit union member business lending (MBL) cap. He noted that, while banks claim there is low demand for small business credit, credit unions have witnessed a 30% increase in their MBLs. Cheney warned, however, that credit unions that are most successful in small business lending are coming up against an arbitrary MBL cap set in 1998. Cheney touted bills currently pending in the House and Senate that would increase the MBL cap to 27.5% of assets, up from 12.25%. If the higher cap becomes law, Cheney noted, credit unions—at no cost to the taxpayer—could infuse more than $13 billion in new funds into the U.S. economy and create up to 140,000 new jobs in the first year. Cheney concluded the interview by emphasizing that “credit unions really are a better deal.” Use the resource link below, to access the CNN Money video clip.
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