Many credit union executives are apolitical, and don’t actively fight for or against issues, said Greater Kentucky Credit Union CEO Mike Fromma. The leader of the $63 million credit union said he thinks there is a “silent majority” of credit union executives nationwide who oppose efforts to raise the member business lending cap, but they aren’t likely to voice their opinions on the matter.
“They just say ‘I don’t have a dog in this one so I won’t say anything’,” he said. “But, they do, because if a credit union fails, they have to pick up the tab.”
Fromma said he spoke out at a Kentucky Credit Union League board meeting against S. 2231, the Small Business Lending Enhancement Act, which would raise the credit union member business lending cap from 12.25% to 27.5% of assets. And, he said he’s chastised some colleagues who he knows also oppose the bill but haven’t spoken out against it.
Twelve and a quarter percent of assets is plenty of risk for the credit union movement to take on, he said, especially considering total capital for the industry is around 10%.
The Lexington, Ky. Chief executive said he’s seen a number of real estate bubbles burst, and the problems are usually in the same parts of the country: the Sands states and the industrialized Midwest.
“Then you see these same people calling for more business loans and you get suspect after awhile,” he said. “Some of those guys that run big credit unions kind of fly by the seat of their pants. Don’t get me wrong, there’s a lot of good ones out there, but it doesn’t take many to tip the scales.”
“I think we all learned a lesson from the corporate system,” he said.