CUNA statement urges Senate action on MBLs

WASHINGTON (3/3/10)--The Credit Union National Association (CUNA) continues to encourage legislators to support S. 2919, the Small Business Lending Enhancement Act, calling the member business lending (MBL) legislation "a job creation bill that would not cost the taxpayers a dime and would not increase the size of government."

CUNA made the comments in a statement submitted for the record of a hearing Tuesday by the Senate Banking subcommittee on economic policy, entitled "Restoring Credit to Main Street: Proposal to Fix Small Business Borrowing and Lending Problems."

In the statement, CUNA urged support of S. 2919, which would increase the credit union MBL cap from 12.25% to 25% of a credit union's total assets and would increase the "de minimus" threshold for member business loans from $50,000 to $250,000.

CUNA has estimated that the increased MBL cap would free an extra

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CUNA assured lawmakers that an increase in credit to small business members would have "a negligible effect on credit union lending to consumers," as "any increase in business lending would for the most part replace investments rather than consumer loans."

Although credit union business lending portfolios grew a strong 11% over the past year, CUNA said that the growth of these portfolios will slow unless Congress acts to lift the MBL cap. And while business growth has undeniably slowed as a result of the ongoing recession, CUNA said that members are letting their credit unions know "there is demand for business lending."

While risky lending is a concern for legislators and regulators, CUNA said that credit unions, on balance, experience far fewer losses related to business loans than banks do. Increased business lending by credit unions would be very low risk, the CUNA statement assured.

Tuesday marked the second time in a week that CUNA has discussed MBLs with legislators. St. Mary's Bank CU President/CEO Ronald Covey told assembled lawmakers late last week that restricting credit union business lending "does a great disservice to business owners everywhere, and stymies job growth."

Covey was testifying on behalf of CUNA before the House Financial Services and the House Small Business Committees. The House MBL bill is known as the Promoting Lending to America's Small Businesses Act (H.R. 3380).

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