Credit unions are increasing their legislative efforts to convince Congress to raise the cap on member business loans.
On Aug. 6, University of Iowa Community Credit Union CEO Jeff Disterhoft gave a short presentation to President Obama during a town hall meeting at Northwest Iowa Community College, CUTimes.com reports.
“I told him that we are near our cap and just on Monday I had to turn a creditworthy electrical supply company down for loan,” Disterhoft said, CUTimes.com reports. “I then talked about what raising the cap would do to create jobs and increase the flow of credit to many communities.”
Congressman Erik Paulson (R-Minn.) met with the Richfield Bloomington Credit Union on Aug. 6 and listened to credit union executive’s case for raising the cap.
Legislation in both the House and Senate has been introduced to allow eligible credit unions to increase their small business lending to 27.5 percent of total assets at a rate of growth not to exceed 30 percent a year, CUTimes.com reports.
The Senate Banking Committee examined their bill during a hearing last month and there are indications that the House Financial Services Committee will schedule their hearing sometime after members return to Washington, DC after Labor Day.
Credit unions must be at or above 80 percent of the current cap, have five or more years of member business lending experience and exemplify sound underwriting and servicing, CUTimes.com reports. Credit unions with net worth ratios below the well-capitalized requirement are prohibited from making new business loans.
Banks have undertaken major lobbying efforts to stop the bills in both Chambers.
“Certainly this is not a cure-all for our economy,” Sen. Chuck Schumer (D-N.Y.), who has introduced similar legislation in the past, said during the Senate hearing. “But with small business still struggling to get the credit they need, it seems to me that we should be trying everything we can to increase lending.”