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Jobs effort bankers neglect could help boost MBLs
WASHINGTON (1/12/10)--Sen. Kristin Gillibrand (D-N.Y.) is pushing to include member business lending (MBL) legislation as part of pending job-creation legislation that will soon come up in Congress. Gillibrande said the MBL legislation “would free up lending at not-for-profit credit unions in every corner of America to small businesses” and is necessary “if we’re going to create new jobs and rebuild our economy for the long term.” House Financial Services Committee Chairman Rep. Barney Frank (D-Mass.) in an interview with The Boston Herald, also discussed the small business lending issue, threatening to “give credit unions more power” if banks neglect to improve their current lending practices. State legislators have also come out in support of lifting the MBL cap, with Michigan State Sen. Randy Richardville (R) asking Rep. John Dingell (D-Mich.) to support MBL legislation in a recent letter. Commenting on these reports, Credit Union National Association (CUNA) Senior Vice President of Legislative Affairs John Magill said that CUNA is “delighted that the legislators are giving serious attention to this very important lending tool for credit unions.” Speaking at Long Island, N.Y.-based Bethpage FCU, Gillibrand called S. 2919, the Small Business Lending Enhancement Act of 2009, “common-sense legislation” that would “give small businesses more of the capital they need to get off the ground, grow and get thousands of Americans back to work.” Similar to H.R. 3380, the Promoting Lending to America's Small Businesses Act, which was recently introduced by Reps. Paul Kanjorski (D-Pa.) and Ed Royce (R-Calif.), S. 2919 would increase the cap on credit union member business lending to 25% of a credit union's total assets and raise the de minimis loan threshold from $50,000 to $250,000. CUNA has estimated that expanding the capacity of credit unions to make business loans could result in $10 billion in new business loans through credit unions and at least 108,000 new jobs in the first year after enactment, with no additional costs to taxpayers. Expressing frustration with the current “intolerable” lending situation, Frank said that he would consider increasing credit union lending authority if conventional or community banks do not step up to support small businesses. In his interview, Frank said that while the economic recovery is “under way,” it is “not expanding enough.” Frank has also promised to organize a hearing on loan practices in the coming weeks.
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