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ABA, ICBA Urge House to Oppose Raising CU Business-Lending Cap

Posted on 2/7/2012

ABA and the Independent Community Bankers of America yesterday strongly urged all House members to oppose -- and reject any efforts to move forward -- a bill (H.R. 1418) that would raise the member business-lending cap for qualifying credit unions from 12.25 percent to 27.5 percent of total assets.

"H.R. 1418 would help [a] new breed of large, growth-oriented credit unions by allowing them to abandon their tax-subsidized mission of serving people of modest means. This was not Congress' intent when [it] implemented a business-lending cap on credit unions and we urge you to reject any attempts to remove the cap," the trade groups said in a letter.

The facts show that the bill is simply not necessary because the current congressionally mandated business-lending cap of 12.25 percent of assets mostly affects only the largest credit unions that want to be "bank-like" without paying taxes. In fact, only 29 credit unions of nearly 7,200 are at or near the statutory business-lending limit, ABA and ICBA explained.

"In other words, 99 percent of credit unions have more than enough authority and lending capacity to make additional loans to small businesses today, yet have chosen not to do so," they said. "And all credit unions can make as many business loans as they desire that are not subject to any cap -- including all loans of $50,000 or less and any Small Business Administration loan."

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