Sen. Charles Schumer said today he plans to introduce legislation to lift the cap on member business loans that credit unions can make.
In a letter to colleagues he said the measure would "help credit unions fill the gaping void in small business lending during this credit crisis."
Credit unions have been subject to an MBL cap of 12.25% of their assets since 1998.
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Schumer (D-N.Y.), the number three member of his party's leadership and a member of the Banking Committee, said the bill would require the NCUA to make two reports a year to Congress on small business lending and loan delinquencies so that Congress can monitor the impact of the cap elimination.
Credit unions have been pushing for this for a long time and both CUNA and NAFCU have said it would inject $10 billion of capital in the economy. Earlier this year, House Financial Services Committee Chairman Barney Frank (D-Mass.) expressed doubt that there was enough for getting such a measure passed in that chamber this year.
NCUA Chairman Michael E. Fryzel praised Schumer's initiative and said that these kind of loans provide a "tangible and important benefit for small businesses, provided that the loans are properly regulated and made in a prudent manner, consistent with safety and soundness standards."
The measure is certain to run into strong opposition from the banking lobby, which was one of the main forces behind the cap.
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