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MBL increase brings choice credit access ACI blog
WASHINGTON (4/26/12)--Increasing the credit union member business lending cap "means more competition, greater choice, and increased access to capital," American Consumer Institute (ACI) Center for Citizen Research President Steve Pociask said in a recent blog post.

Separate pieces of House and Senate MBL legislation would increase the MBL cap to 27.5% of a credit union's assets, up from 12.25%. Within the first year of enactment, the increased MBL authority would help to inject $13 billion in loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA estimates show.

The Senate version of MBL legislation, the Small Business Lending Enhancement Act of 2012 (S.2231), is on the Senate schedule, but a voting date has not been determined.

Passing MBL legislation "will mean new investment," and "there is plenty of pent up demand for capital as a result of very restrictive lending by banks," Pociask said. "During the last recession, bank loans fell by the double digits, while credit union lending increased toward its cap. In 2011, banks denied 60% of small business bank loan applications. So the legislation would increase small business access to capital and increase market investment," he added.

Pociask said the only reason banks oppose the legislation is because it increases market competition. "Because credit unions are pretty good in managing risks and providing affordable loans, banks do not want the market competition – they want market protection. The reality is that heightened market competition would benefit the economy." The increased competition that an MBL cap increase would bring would be good for the economy in general, Pociask said.

"The [American Bankers Association] doesn't like the bill, and that is precisely why the bill is a step in the right direction. It is as simple as that. It's time to let the market work," he added.

The nonprofit ACI says its focus is "to support concepts which spur competition, encourage innovation, create jobs and benefit consumers overall, while maintaining reasonable and necessary consumer safeguards."

For the full blog post, use the resource link.
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