WASHINGTON – The decade-long effort to lift the member business loan limit, which had been dying on the vine, was revived by the written endorsement of Treasury Secretary Timothy Geithner.
“The administration’s support of our efforts to increase the industry’s business lending is a very significant step forward as we continue to pursue enactment of such legislation in this Congress,” said NAFCU President Fred Becker of the new breakthrough on MBLs.
Treasury Secretary Geithner told the chairman of the House Financial Services Committee, Barney Frank, he supports the raise in the MBL limit for healthy credit unions to as much as 27.5% of assets, more than double the current 12.25% limit.
Credit unions have been working for years to raise the limit but were losing hope of getting a legislative change this year until last week, when a high-ranking Treasury official said during a House hearing the Obama administration supports the MBL bid as part of a broader bill that would provide small business loan capital for community banks. Geithner’s letter to Frank formalizes the Administration’s support.
The Treasury secretary suggested certain conditions for the increased limit, including a proven record of making MBLs, proof the credit union is near the current limit and has strong capital. “It is important that reforms are not done in a way that inappropriately introduces more risk to credit union members, the credit union system, the National Credit Union Share Insurance Fund or the financial system as a whole,” wrote Geithner to Frank.
Frank is said to be considering adding the credit union initiative to a bill that would have the Treasury invest $30 billion in community banks to be targeted for small business loans by buying preferred shares in the banks. House members said during a hearing on the proposal last week the credit union initiative should be included as it would provide additional capital for small businesses without costing any money.
The Financial Services Committee is expected to take up the bill in the next few weeks in hopes of getting it passed through Congress by the end of the year.
