Credit Unions Fight Cap Law

Source: Wall Street Journal

A showdown between credit unions and banks could have serious implications for small-business lending.

Credit-union lobbying groups in Washington are pushing for legislation that would lift a 12-year-old law that curtails credit-union lending to 12.25% of total assets. Raising the cap to 25% and easing other restrictions would allow credit unions—important sources of financing for many small operations—to extend up to $10 billion in additional business loans in the first year the cap is lifted, according to the Credit Union National Association in Washington.

The proposed legislation, however, faces stiff opposition from banking lobbying groups, which argue that an increased cap would create a distorted competitive environment detrimental to community banks, also big lenders to small businesses.

"It's a test of political wills," says Dan Mica, chief executive of the Credit Union National Association.


Read more: http://online.wsj.com/article/SB10001424052748704717004575268563868988320.html?mod=WSJ_hpp_MIDDLTopStories

credit unions are mostly non profit that serve a community. Most are run by Boards elected by the membership that oversees loans and investments. That is in the public interest. We need to support credit unions and allow them to be more competitive with banks.
Banks serve no one but the bankers and have no mission to serve anyone else.
If the banks are agin' it...Im for it.

but isn't that at the heart of capitalism? So they should STFU and STFD...

investing in risky businesses. They're not "too big to fail" like the commercial banks that make these loans. The depositors would just be left high and dry after the smaller-than-the-FDIC credit union guarantee fund goes kaput.

We all know that a lot of banks failed in the last 2.5 years. Do you know whether the credit unions had a lower failure rate than the banks?

I don't think more leverage is better.

Not sure I know the answer myself.