WASHINGTON (11/9/09)--While credit union funds could not fully make up the difference, credit unions could fill "a small piece" of the business lending gap that has been created by the recent bankruptcy filing of CIT Group, Credit Union National Association President/CEO Dan Mica said in an appearance on Bloomberg TV. And he stressed credit unions could do even more "if we're just given a little leeway by Congress."
Supporting HR 3380, the Promoting Lending for America's Small Business Act, which would raise the amount of money a credit union can devote to business lending, is a "crucial issue" for both the U.S. Congress and the country in general, Mica said. He added that the legislation could help inject up to $10 billion in new credit union lending to bolster the struggling economy and create more than 100,000 new jobs. Specifically, the legislation, which is awaiting congressional action, would increase credit unions’ cap for member business lending (MBL) to 25% of a credit union's total assets, up from the current 12.25% limit. It also would raise the "de minimis" threshold for a loan to be considered a "member business loan" to $250,000, from $50,000, and exempt from the cap loans made to non-profit religious organizations, as well as those made in qualified underserved areas. The legislation would aid the economy at no cost to taxpayers, Mica emphasized. In fact, he said, increasing the amount credit unions are allowed to lend "would ultimately raise” tax revenue by creating more strong jobs from small businesses and could aid economic recovery "without spending one dime of government money." Credit union business loans can be used for nearly any business purpose as long as the member seeking the loan meets some requirements, Mica said during the 11-minute interview with Pimm Fox, host of Bloomberg's "Taking Stock" program. While commercial lending from banks has decreased 8% over the last year, business lending from credit unions has increased 14%, "and we can go up a lot more" if given the green light from congress, Mica said. Asked who is objecting, Mica said a "certain group" in the banking community regularly opposes non-profit financial services entities, such as credit unions. But, he said, the recent decreases in bank lending in the face of increased credit union lending shows that "their argument is hollow." In a related story, the Washington Post
on Friday reported that while large U.S. businesses continue to have some success in obtaining loans, many smaller U.S. firms are still being rejected by banks. One example found a business owner was forced to look beyond U.S. shores, opting for funding from foreign banks when striking out at domestic banks.