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Schumer To Introduce Credit Union Bill
By Marc Tracy
Yesterday we wrote about the grumbling in the small-business community over a federal law that bars credit unions--which are not-for-profit, member-owned lending institutions--from lending more than 12.25% of their total assets in business loans. Given the current credit situation, and given the claim of some that credit unions could make $10 billion in business loans in just one year if the rule were lifted, many were understandably upset with the rule.
Well, Sen. Chuck Schumer (D-N.Y.), one of the most powerful senators, has come forward to announce that he will introduce a bill raising the 12.25% limit in an effort to get business loans moving again--particularly to small businesses. “Our focus must be on increasing the lending to small businesses, which are the lifeblood of our economy,” he said, according to Dow Jones. “The situation facing these businesses right now is much worse than a matter of them simply being denied new loans. They are being strangled by having existing lines of credit pulled.”
Faithful BizBox readers know that Schumer is one of our favorites: we bring him up every so often to remind people that at least someone has proposed simply having the government lend directly to small businesses. Certainly he's not disappointing here.
While there are good reasons for not allowing credit unions free reign to lend however they want--briefly: it would unduly put community banks out of business--raising the limit does seem like a good idea. (Incidentally, commenter Robin Marohn: in saying the limit wasn't arbitrary, we meant having the limit at all, not the 12.25% figure, which is arbitrary and which we'd be happy to see changed; we apologize for not making that more clear.)
This is exciting: genuine attention being paid at the federal level to your problems! (Feels good, no?) As Matt Drudge likes to say, "Developing...".
Comments (1)March 5, 2009 6:12 PM
Comments (1)
The clarifcation is appreciated but I still don't understand why there should be *any* cap. Increased access to funds for business isn't going to put a well-run community bank out of business.
Case in point: My credit union has an exemption to the 12.25 % cap because our main book of business is agriculture (business) loans. When we opened an office in a rural community a few years back, banks (community included) were charging reduculous loan rates. We priced our rates fair, the banks grumbled, but lowered there rates to get competitive. Last time I checked, they were all still in business.
Now you tell me -- who benefited from our ability to do a business loan? And, more to the point, who suffered?
Posted by Robin Marohn | March 6, 2009 1:53 PM
Posted on March 6, 2009 13:53