SAN ANTONIO, Texas (3/15/12)--The current 12.25% of assets credit union member business lending cap "is obstructing a crucial source of capital to small businesses at a time that it's desperately needed," Maria Martinez, president/CEO of Border FCU, Del Rio, Texas, told members of the House Financial Services financial institutions and consumer credit subcommittee on Wednesday.
Martinez appeared at a San Antonio, Texas field hearing on the challenges facing small financial institutions in Texas. She was joined by Robert Glenn, president/CEO of Air Force FCU, of San Antonio, will testify alongside other finance industry representatives.
Martinez in prepared testimony said the MBL cap prevents her credit union from offering business loans to members, as the $100 million in assets credit union would be extremely limited in the number of MBLs it could offer, and would not have the capacity to retain the employees it needs to continue offering MBLs for the long-term.
Legislation that would increase the 12.25% of assets MBL cap to 27.5% is active in both the U.S. House and Senate. Martinez said lifting the cap would be beneficial to both her credit union and communities throughout Texas and across the country, and added legislators "can have confidence that credit unions would lend the estimated $13 billion in the first year because credit unions loaned to their members in the darkest hours of the financial crisis; they have the capacity and experience to stay with them in the recovery, if Congress gives them permission." Business leaders joined the Credit Union National Association (CUNA) to seek Senate MBL support this week, (See related story: Small biz groups, CUNA call for Senate MBL action)
Regulatory burdens and examination issues also create problems for Border FCU, Martinez said, and these sorts of issues were also cited by Glenn in his testimony.
Glenn said his credit union, Air Force FCU, has been harmed by expensive regulations that provide limited benefit to consumers, including debit card interchange fee cap regulations. While some of these rules will not be applicable to credit unions that are similar in size to Air Force FCU, the cost of the regulation will be felt by consumers in some way, he said. Glenn also commented on the CFPB and National Credit Union Administration (NCUA) examinations.
For more on Wednesday's hearing, use the resource links.
Credit union concerns will also be aired in a Las Vegas, Nevada-based subcommittee hearing on potential private sector solutions to foreclosure issues. Sue Longson of El Monte, California-based SCE FCU, will testify at that hearing, which is scheduled to take place today.