Rep. Bill Orton, D-Utah, has introduced a bill that would more than quadruple funding for a program that offers low-interest loans and technical assistance to credit unions with low-income memberships.
The Credit Union Community Development Enhancement Act of 1993 would increase the fund to $25 million from the current $6 million.
The additional money will come from $382 million allocated for community development financial institutions by the Clinton administration.
|Strong Track Record'
The Community Development Revolving Loan Fund, administered by the national Credit Union Administration since 1990, offers short-term, low-interest loans. Interest from those loans goes toward technical assistance for the institutions.
"This approach is clearly justified, given the strong track record of the credit union community development lending under this program," Rep. Orton said last week when he introduced the bill.
He said it is intended to be an amendment to the community development bill when that legislation is marked up in the Banking Committee.
Trade Group Initiative
The proposal follows a letter sent out two weeks ago by David A. Miller, chairman of the National Association of Federal Credit Unions.
In it, he suggested the $19 million funding increase and the earmarking of loan interest for technical assistance.
The first suggestion matches a provision in a bill introduced by Sen. Bill Bradley, D-N.J.; the second matches provisions in proposals presented by Sen. Alfonse M. D'Amato, R-N.Y., and Rep. Floyd Flake, D-N.Y.
"What we wanted to do was point out that if Congress was concerned with community development that one excellent move would be to increase funding for the revolving loan fund," said David John, director of legislative affairs for the trade group.
|Would Open Up Lending'
Since the NCUA began administering the fund, $7.8 million has been disbursed to 47 institutions. So far $1.8 million has been repaid on schedule, and about $280,000 in interest has been collected.
"If additional funding were provided, it would open up lending once again and additional interest would go to technical assistance for credit unions" said Ron Lewandowski, president of the NCUA Central Liquidity Fund and chairman of the revolving fund.
Last year, slightly more than $1 million was available to the fund, Mr. Lewandowski said, while requests totaled around $1.9 million.
The maximum amount of the loans is $500,000, and they carry 2% interest.