A recent disbursement of government funds to banks has the Wisconsin Credit Union League calling foul.
The league called out a portion of the $767 million recently coming from the U.S. Treasury Department that went to banks to help get credit flowing to small businesses. The funds are from the $30 billion Troubled Asset Relief Program II earmarked by Congress last year.
Two Wisconsin banks received $15 million and $1.5 million, respectively, according to WCUL President/CEO Brett Thompson. He said the Treasury’s move may be ill-advised given that credit unions have had to turn down loans in large part to the 12.25% member business lending cap.
“Yet, as we’ve seen throughout the economic downturn, throwing taxpayer money at shareholder-owned banks fails to help main street businesses,” Thompson said.
Wisconsin banks’ business lending decreased by $63 million in the year preceding March 2011, which was the third consecutive year of decreases despite receiving government funding to aid small businesses, according to the league.
Meanwhile, credit unions increased their lending by $90 million during the same period, the league noted. However, the MBL cap has stopped some cooperatives from being able to lend more, Thompson pointed out.
“Why direct taxpayer money to just two for-profit banks when member-owned credit unions all across the state could use their very own money to lend to small businesses to create jobs?” Thompson said.