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Wisconsin CU League News Release - 08/25/10


WBA’s swipe at credit unions to serve more underserved is shameful

Banks’ own refusal to make loans has imperiled one of the largest underserved groups – small businesses


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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 Wisconsin Bankers Association’s (WBA) latest swipe at credit unions – claiming that the co-ops need to expand their outreach to underserved populations – is another sorry attempt to deflect from the fact that credit unions’ business lending benefits the very people banks turn away.

“What an irony that banks suggest credit unions do more to serve the financially underserved,” says Brett Thompson, President & CEO of the Wisconsin Credit Union League. “Isn’t that just what credit unions are trying to do in making more business loans available to the small businesses that can’t get loans from banks?”

Thompson says it’s outrageous for banks to claim they do a better job than credit unions in serving the underserved when it’s been the banks that have virtually shut off the credit spigot for small businesses, creating a void for loans that credit unions can’t completely fill under current law.

Credit unions’ tendency to grant the kind of small loans that banks won’t – averaging around $174,772 – and the fact that credit unions make most of their business loans to households with incomes below $50,000 makes WBA’s claim almost laughable, Thompson says.


“It might be funny if the future of many small businesses were not at stake, but we’re talking about thousands of jobs that could disappear and otherwise sound enterprises that are being jeopardized because banks can’t or won’t lend to these small businesses,” he added.


Wisconsin banks’ business lending dropped by 19% from March 2009 to March of this year. Credit unions responded by increasing their lending by 11% but many have maxed out what they can lend because their business lending is capped at 12.25% of total assets.   Federal regulators and the Obama administration have expressed support for legislative language that would raise the cap to 27.5% of total assets. Yet despite their current claims of concern for the underserved, banking trade groups have opposed it.


“The broken record is repeating,” Thompson said. “WBA quotes the same flawed, disavowed studies about credit unions, once again misstates the mission of credit unions and claims that credit unions’ member-favored pricing for financial services somehow constitutes a subsidy.”

In fact, Thompson explains, credit unions return $200 million to members annually in the form of better rates on loans, higher rates on deposits and lower or fewer fees. He adds that credit unions’ record membership growth, attributed to the financial benefits of owning one’s financial institution, has been lauded in the press. More consumers – including the financially underserved – have flocked to credit unions during financially challenging times because credit unions will help people in ways than banks won’t. Not-for-profit credit unions exist to serve members, not make profits.


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