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
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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