Representatives of CUNA and NAFCU are using appearances at today's joint hearing of two House committees to press their case for raising the cap on member business lending from 12.25% of assets to 35%, a move they say will enable credit unions to do more to help jumpstart the economy.
Mid-Atlantic Federal Credit Union President/CEO Rick Wieczorek pointed out that his credit union is going hit the 12.25% cap soon and "we may soon face a situation where our efforts [to help businesses] are curtailed arbitrarily."
Wiecczorek, who is testifying on behalf of NAFCU at a joint hearing of the House Banking and Small Business committees, said helping credit unions was only fair in light of efforts to help other lenders, such as community banks.
He said if Congress enacts the Obama administration's proposal to lend leftover TARP funds to community banks lawmakers should include provisions to raise the MBL cap.
Ronald Covey, president/CEO of St. Mary's Bank, the nation's oldest credit union, expressed similar sentiments and noted that business lending is "part of the credit union DNA" going back to 1908. Covey, representing CUNA, said the loan applications in his credit union's pipeline, would cause it to exceed its $85.3 million limit on business loans by $4.8 million.
Both CEOs said the NCUA was capable of ensuring that any additional lending was handled in a safe and sound manner. They cited a letter sent this week by NCUA Chairman Debbie Matz to Treasury Secretary Timothy Geithner promising to strengthen regulation in this area if the cap is raised.