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Wisconsin CU League News Release - 08/19/10


Citizens support making more business credit available at no cost to taxpayers

Voters say Congress should pass an amendment with lending bill that would create jobs, grow economy


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Chris Henzig
Director of Communications
(262)549-0200, Ext. 6019


Chad Helminak
Web Producer and Media Relations Manager
(262) 549-0200, Ext. 6012


Pewaukee, Wis. - The vast majority of Wisconsin voters polled by The Wisconsin Credit Union League – 75% – say they would support an amendment that’s been proposed to the U.S. Congress to make more credit available to Wisconsin companies through credit unions.

An even larger majority of those polled – 84% – say they’d be even more likely to support the measure knowing it would create $389 million of new credit for Wisconsin firms, add 4,229 jobs here and cost taxpayers nothing.

Yet the amendment that could do just that – proposed by U.S. Senator Mark Udall as part the Small Business Lending Fund Act, H.R. 5297 – is stalled in Congress. Procedural moves in the U.S. Senate have prevented action that could help Wisconsin businesses that have nowhere else to turn for loans.

The Udall amendment would make more business credit available by raising the cap on credit unions’ member business lending from 12.25% of assets to 27.5% of assets. The provision would allow credit unions to offer more loans in the same safe, sound manner they’ve made them for years. Federal regulators support the measure, in part because there is no concern for increased risk. As of March 2010 the delinquency rate for Wisconsin credit union business loans was 2.23% compared to banks’ 2.77%. Credit unions’ loss rate – at 0.43% – was 30% lower than that of state banks.

The measure would be a boon for small businesses with modest credit needs – the very businesses that often find it difficult to find financing. Because credit unions strive to meet their member-owners’ credit needs regardless of profit, they’ll grant smaller loans. The average credit union business loan in Wisconsin is just $174,772. Most credit union business loans go to households with incomes below $50,000.

The Wall Street Journal reported in March that bank lending has declined at the sharpest rate since 1942. In Wisconsin, banks’ business lending decreased 19% from March 2009 to March 2010. During that same period, Wisconsin credit unions increased their business lending by 11%, but many have maxed out what they can lend to businesses because of the federal cap.

Sen. Udall’s amendment mirrors legislative language sent to federal lawmakers by the U.S. Treasury earlier this year, and is backed by the Obama administration.

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