Wednesday, March 9, 2011

Its Deja Vu All Over Again

Last night, Senator Mark Udall (D - CO) introduced legislation (S. 509) that would more than double the business lending authority for eligible credit unions.

Currently, the member business lending limit is 12.25 percent of assets. This bill would raise the aggregate limit to 27.5 percent of assets.

This marks the fifth consecutive Congress where legislation has been introduced to raise the member business lending limit for credit unions.

I feel like I am trapped in a time loop and like Phil Connors (Bill Murray) in the movie Groundhog Day, instead of waking up to Sonny and Cher on the radio, I am waking to a credit union business lending bill.


  1. There is a simple cure for your problem, Dr. Leggett.

    Stop objecting to it. Let it become law. And then you can wake up outside the time loop.

  2. I have a better suggestion and it does not require legislation. NCUA should get out of the way of a credit union making a legitimate business decision by becoming a mutual savings bank.

  3. The typical argument I hear is that CU's do not have the expertise to perform business lending but in that same breath say if they convert to a Mutual Savings Bank that they can provide this service. How does this even make sense? This theory basically states that Credit Unions all of a sudden become smarter and their business lending IQs increase because they are now a bank? If the people on Day 1 aren't smart enough to do it but on Day 2 the only difference is that they are now a bank... how did those credit union lenders become smarter overnight?

  4. anonymous, youre thinking like a lobbyist instead of a business person. many cu's didnt bother to START a MBL program because they did the math and quickly realized that, once they originated enough business to make it worth while, they were at/near the they never bothered.
    what is more...MANY cu's DONT CARE about the MBL cap but mysteriously it remains the #1 priority for the trade associations...why?
    is it because its the only initiative that has a prayer?
    certainly alternative capital, risk weighting of assets and fom restrictions are important to many CUs but maybe NOT TO LAWMAKERS.

  5. You need to take off your blinders and see that many banks are bad for America. They caused the greatest financial collapse in history. In addition, all you can do is bash credit unions. Have you ever been in, worked, or held an account at a credit union? If you did, you would see a much different side of credit unions. We are for the people who have accounts, not shareholders. All your degrees and credentials do not make you an expert. You are just like all the other experts who read and study, but never worked in the industry or held a job in the area of finance. You are so off base.

  6. Responding to, "The typical argument I hear is that CU's do not have the expertise to perform business lending but in that same breath say if they convert to a Mutual Savings Bank that they can provide this service."

    Fact of the matter is that as a mutual savings bank, their business lending activities would be subject to the appropriate level of regulatory controls and oversight --- as opposed to the wink-and-a-handshake method that's being utilized by far too many CUs making business loans today.

  7. I'm not sure what CUs you are referring to that make "wink-and-a-handshake" business loans but when I got my ABA line from my CU they performed as much dilligence as the Community Bank I came from (T-Pines). They both used Laser Pro documents but the CU actually comes and visits my business regularly to check that the asset borrowing base follows our business loan agreement. I actually told my Business Banker at the CU that he is kind of a pain but I understand why he does it. Way to make a blanketed statement that carries no weight.

  8. "The appropriate level of regulatory controls and oversight" - You mean the same oversight that was on watch when all the record numbers of small business banks failed the last 3 years. You sir are a genius!



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