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Credit Unions Too Small and Too Disciplined to Become TBTF

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We must take issue with Ike Brannon's argument against lifting the member business lending cap on credit unions ("Increasing Business Lending Cap Will Make Credit Unions TBTF," Nov. 27). 

The idea that Main Street credit unions could become akin to the "too big to fail" Wall Street banks if the MBL cap were lifted is just too unrealistic to even be taken seriously. The average credit union in this country has $145 million in assets, billions of dollars smaller than the behemoth banks.

One must also note the failure of financial institutions – whether credit unions or banks – is virtually always due to lending.  Lending is, however, what all financial institutions must do.  And, for the record, it is worth noting that the overall quality of credit union business loans is much higher than that of bank commercial loans, with lower delinquency rates and chargeoffs.

More to the point, Brannon's concerns about the safety and soundness of credit unions that undertake business lending are based on ancient history. Today's proposed legislation, H.R. 1418 and S. 2231, allows credit unions to offer member business loans only if they satisfy certain strict criteria. These include having at least five years' experience in handling a member business lending program, a classification of "well capitalized," an MBL portfolio that is at or above 80% of the credit union's current cap and other requirements to prevent any problems.

These measures have been endorsed by the National Credit Union Administration and the Treasury Department. I don't see similar requirements being imposed on the banks that tanked our economy with their reckless lending practices.

As we see it, Brannon's assertions do nothing to advance our country's greater good. I hope at some point, he and the banking community will put aside their parochial interests and put the best interests of Main Street ahead of their own agenda. 

Our country's anemic economy desperately needs a boost. Americans need jobs. The passage of bipartisan legislation to lift the MBL cap—H.R. 1418 and S. 2231—would do just that. It is the one solution that we have not tried and the cost to taxpayers is zero.

Simply put, it is time for our leaders to lead. It is time to pass this common-sense jobs bill and put people back to work. 

Fred R. Becker, Jr. is the president and CEO of the National Association of Federal Credit Unions.

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