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Mica backs MBL cap lift on iFox Businessi

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WASHINGTON (5/19/10)--In a Tuesday appearance on Fox Business Channel, Credit Union National Association (CUNA) President/CEO Dan Mica spoke out against the “artificial” limits that have been imposed on credit union member business lending (MBL) and called on Congress to increase the MBL cap to 25% of a credit union’s total assets.

Credit unions are “well capitalized” and could “double the amount of loans” that they are currently servicing if that cap is lifted, Mica added. Mica also cited CUNA statistics that show that lifting the MBL cap would inject $10 billion in new funding into the economy and create as many as 100,000 new jobs, at no cost to taxpayers. Lifting the cap, which currently stands at 12.25% of assets, would not threaten the safety and soundness of credit unions or the credit union system, Mica added, as credit unions overall have a far lower loan default rate that that of banks. Mica on Tuesday also testified during a House Financial Services Committee hearing on increasing lending to small businesses. (See related story: MBLs: Mica testifies, Rep. Frank talks vote.) When asked about proposals to increase the amount of small business loans provided by banks, Mica said that if community banks need the aid of the government to spur on their own lending increases, he does not oppose them. However, Mica expressed puzzlement at banks’ continued opposition to allowing credit unions to increase their own small business lending capacity.

CU biz lending gets support from Obama administration markup coming

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WASHINGTON (5/19/10)--The Obama administration voiced support Wednesday for raising credit unions' business lending capacity, and House Financial Services Committee Chairman Barney Frank (D-Mass.) said his committee would consider an administration proposal to that effect--in a markup--"fairly soon." The support and the congressional action were noted during a Tuesday
Click to view larger imageCUNA President/CEO Dan Mica (right), testifying before the House Financial Services Committee on small business lending Tuesday, told lawmakers that credit unions could do a lot for the U.S. economy if the statutory cap on member business lending was increased. To Mica's right is Paul Atkins, a member of the Congressional Oversight Panel and former Securities and Exchange Commissioner. (CUNA Photo)
hearing before the House Financial Services Committee on promoting lending to small business. Credit Union National Association (CUNA) President/CEO Dan Mica--who testified at the hearing (the only credit union representative)--said after the hearing that he welcomed the administration's support for raising the business loan cap for credit unions, and thanked Frank for taking up the administration's proposal. "In announcing that there would soon be a committee vote on credit union business lending legislation, the chairman was giving his committee members a heads up," Mica said. "We appreciate that, and will work with him for smooth consideration of this proposal. Credit unions can help the nation get back on its economic feet by having more capacity to make business loans." Gene Sperling, counselor to U.S. Treasury Secretary Timothy Geithner, told Frank that the Obama administration supports the negotiated member business lending (MBL) proposal--the first time the administration has publicly expressed its support. Additionally, for the first time publicly, an administration representative stated the specifics of an MBL proposal. Among them:
* Raise the current 12.25% MBL cap to 27.5% (higher than the 25% now in the House and Senate MBL bills); * To go to the higher cap, credit unions would need to be well-capitalized (current 7% net worth ratio). If they fell below 7%, they would need to stop making new MBLs; and * Credit unions would also need five or more years of MBL experience, would have to demonstrate sound underwriting, and have strong management and adequate capacity in place.
Frank told the members of the committee that he was “putting everybody on notice” that he plans to schedule a committee vote on MBL legislation “fairly soon.”

Inside Washington (05/18/2010)

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* WASHINGTON (5/19/10)--The Treasury Department’s Community Development Financial Institutions (CDFI) Fund released the names of five organizations that will receive grants under the first round of the Financial Education and Counseling Pilot Program. The grants, totaling $2 million, will provide organizations with financial assistance to establish and expand financial education and counseling services for prospective homebuyers. The recipients are: Boulder County Housing Authority, Boulder, Colo.; Consumer Credit Counseling Service of WNC, Asheville, N.C.; Mission Economic Development Agency, San Francisco; New Hampshire Housing Finance Authority, Bedford, N.H.; and Resources for Residents and Communities of Georgia Inc., Atlanta. Each will receive $400,000 ... * WASHINGTON (5/19/10)--The Senate approved a proposal by Sen. Mark Udall (D-Colo.) that requires credit reports to include a numerical credit score, which ranges from 300 to 850. Obtaining a score from major credit reporting bureaus usually costs up to $15.95 for each score, said The New York Times (May 17). Udall said the measure will empower consumers and increase financial literacy. The Senate also approved an amendment to ease restrictions on investors who provide start-up capital to small businesses that do not have access to traditional financing. Other approved amendments include a measure by Sen. John D. Rockefeller IV (D-W.Va.) that would preserve the Federal Trade Commission’s authority to enforce consumer protection laws and require the commission to work with a new consumer financial protection bureau, and another measure to prevent federal money from being used by the International Monetary Fund to bail out foreign governments. Senate Majority Leader Harry Reid (D-Nev.) said he aims to finish the financial regulatory reform legislation this week ...

Hurricane preparations can include direct deposit

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WASHINGTON (5/19/10)--National Hurricane Preparedness Week is May 23-29, and credit unions, as well as other financial institutions, can help federal benefit check recipients by urging them to switch from paper checks to electronic payments. The U.S. Treasury Department is particularly urging federal benefit check recipients living along the Gulf Coast and Eastern Seaboard to disaster-proof their money by switching to direct deposit. The Treasury promotes direct deposit through its national Go Direct campaign. According to Treasury research, eight in 10 Americans understand that direct deposit is more reliable in the event of a disaster, such as a hurricane. However, Treasury says, about 10.5 million senior citizens, people with disabilities and others who receive federal benefit payments still rely on paper checks for their monthly Social Security and Supplemental Security Income (SSI) payments. Additionally, approximately 2.7 million Social Security and SSI checks are sent to people living in hurricane-prone states each month. Before hurricane seasons starts, Treasury’s Go Direct direct deposit campaign is urging its national partners, such as the Credit Union National Association and credit unions, to spread the word about the benefits of electronic checks. Go Direct notes that a recent report from the Colorado State University hurricane research team predicts that the Atlantic hurricane season will be stronger this year than in recent years. Leading researchers anticipate an above-average eight hurricanes this year, four of them major, posing a threat to the U.S. coastline. Use the resource link below for disaster preparedness tools.