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Mica Bank profits high despite mortgage crisis
WASHINGTON (2/27/08)--Credit Union National Association (CUNA) President/CEO Dan Mica noted Tuesday that as the impact of mortgage-related losses continues and grows—and millions of homeowners are threatened with foreclosures on their homes--banks continue to post considerable profits. “Even in today's mortgage market, the bankers manage to post significant profits. It shows once again their cries of unfair competition from credit unions are nothing but hype and rhetoric," Mica said. "It makes it all the more objectionable that bankers are working to obstruct credit union efforts to help ease the country’s current credit crunch through modernizing the cap on member business lending (MBL),” Mica said. CUNA has recommended that provisions to increase the MBL cap to 20%, up from the current 12.25%, could be broken out of the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537) and passed independently to help increase credit availability in communities. The Federal Deposit Insurance Corporation (FDIC) Tuesday reported net income of $105.5 billion for banks in 2007, a decline of 27.4% and yet marking the sixth consecutive year income was still above the $100 billion mark. Higher provisions for loan losses, mostly due to weakness in residential mortgage and construction loans , and sharply lower trading revenue were primarily responsible for the drop in full-year earnings, according to the FDIC. The bulk of the earnings decline was attributed by the agency to a few large institutions, but fewer than half of all insured institutions were reported to have increased net income in 2007. "Weakness in the housing sector and the credit squeeze in financial markets made it a very challenging time for many institutions. And we can expect these problems to continue in 2008," said FDIC Chairman Sheila Bair in the release. She also said that "most institutions are so far successfully coping with the challenges they face. Perhaps, said CUNA’s Mica, it is these drops in profit predictions that bankers are most worried about when they seek to restrict credit union lending. “Certainly, their obstructionist efforts against credit unions show no concern with good public policy and what is best for the American consumer,” Mica added.
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