WASHINGTON (10/1/15)--Two organizations from both sides of the political fence united to express support of credit unions’ member business lending (MBL) legislative initiatives as good public policy in an opinion-editorial Tuesday in The Hill.
“It’s hard to find common ground between two parties in Washington these days, but getting America out of this protracted entrepreneurial slump should be an urgent national priority. Here’s one idea that ought to appeal to both sides: Enable the nation’s credit unions to invest more in new and small businesses,” wrote John Berlau and Lindsey Lewis.
Berlau is a senior fellow at the Competitive Enterprise Institute (CEI), a conservative public policy organization. Lewis is executive director of Progressive Policy Institute, an organization started by New Democrats. Their article is entitled, “The Hill: A simple way to grow America’s economy and create jobs.” The Hill is a publication widely read by members of Congress, their staff and key policymakers.
In the article, Berlau and Lewis urge passage of the Small Business Lending Enhancement Act of 2015 (S. 2028) and the Credit Union Small Business Jobs Creation Act (H.R. 1188). Both bills before Congress seek to increase the credit union MBL cap to 27.5% of assets, up from 12.25%. Increasing the cap, they said, is “a reasonable approach that would increase access to credit for small businesses while keeping protections in place.”
The op-ed noted that the number of start-ups has declined for three decades. New businesses are responsible for nearly all net job creation in the U.S. and businesses less than a year old have created 1.5 million jobs on average per year during those decades. Startups drive innovation, and America’s 29 million small businesses employ more than half of the nation’s private sector workforce, said Berlau and Lewis.
They noted that the financial crisis resulted in a 2.2% drop in business lending at banks, while credit unions stepped up and increased member business loans 43.2% in the four years after the crisis began.
“As not-for-profit, community-based, member-owned financial institutions, credit unions are a natural match for small business and new business lending. They are in the unique position of understanding the needs of their business members because credit unions work for their members, and understand the challenges that local businesses face at home,” they wrote.
The authors cited CUNA statistics that indicate that raising the MBL cap would generate a first-year increase in capital of $14 billion, or roughly 152,200 new jobs, without costing taxpayers a cent.
“Lifting the credit union lending cap would allow America’s credit unions to do what they do best--create opportunities in their communities by giving local entrepreneurs and small business access to capital,” Berlau and Lewis concluded.
S. 2028 and H.R. 1188 are strongly backed by CUNA.