Udall’s credit unions bill would increase lending
Summit Daily News
Sen. Mark Udall’s credit unions lending cap bill is gaining momentum once again. The measure was heard last Thursday in a Senate Banking Committee hearing, deemed “an important step to move things forward.”
The Small Business Lending Enhancement Act would raise the cap that currently limits the amount of small business loans credit unions are allowed to make from 12.25 percent of a credit union’s total assets up to 27.5 percent. The Credit Union National Association estimates Udall’s bill will increase small business lending by more than $10 billion in the first year – including an increase of nearly $200 million in Colorado.
“Over the last year, I’ve talked to small business owners across Colorado who say they want to expand and hire, but credit is still tight and banks are unable to help them,” Udall said. “My bill would help credit unions fill the gap – at no cost to taxpayers – and create over 100,000 new jobs in the first year, simply by lifting the arbitrary limit on the amount they can lend to small businesses. At a time when we’re struggling to get people back to work and support small businesses, we shouldn’t hold our economy back with an outdated law.”
Udall previously introduced legislation similar to this bill in the 111th Congress, and as an amendment to a small business bill in mid-March.
“At this point, one in every five senators supports the bill,” said Jennifer Talhelm, Udall’s deputy communications director. “There’s a lot of momentum behind it, but the bill needed to have a hearing. Bottom line, this is about small businesses being able to expand and hire. There’s a lot of support for that.”
Timothy Dore, senior vice president of government relations at Credit Unions Association of Colorado said prior to 1998, there weren’t any restrictions on credit union member business lending. That year, a Supreme Court case took place that expanded credit union membership to communities.
“They needed to have clarification on the legislation, so it went forward,” Dore said. “In that legislation, bank lobbyists worked hard, and were able to pass, a restriction on member business lending.”
Dore said the 12.25 percent cap wasn’t a great number back then, but is now an easy limit for credit unions to reach. Two or three business loans could cause a credit union to reach that cap, he said, so a lot of credit unions don’t even participate.
Now, in a down economy, many small businesses are having trouble getting loans from banks. The expanded lending cap for credit unions would only help “the backbone of America,” Dore said.
“It basically doubles what we currently have,” he said. But, “we’re still going to follow our regular lending practices. Credit unions don’t do a lot of risky loans.”
Dore also said the expanded cap would create more competition between banks and credit unions.
“The winner in competition is the everyday consumer,” he said. “This will just be another way to keep banks honest.”
Talhelm said Udall is now searching for a piece of jobs legislation the bill can be attached to.
“I want to thank the Banking Committee for holding this hearing, which provided some important momentum for this common-sense measure,” Udall said in a press release. “This bill is a responsible answer to one of the biggest problems facing Main Street, and I’m going to keep fighting to get it passed and signed into law.”
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