Credit Unions challenge Banks

Posted: April 19, 2010 in Uncategorized
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The battle lines are being drawn over commercial lending, as cries of mission creep alleged.

Commercial lending has been one of the key drivers of bank profits. Now credit unions are lobbying for higher limits. The 1998 federal law limited the amount of business loans that credit unions could make. The figure was set at 12.25% of assets, and now CUNA (Credit Union National Association) , an advocate of credit unions estimates that if this was lifted, it would generate $10 billion nationally in new credit union business. Credit Unions are seeking to double the % to 25% of assets.

Business lending dropped 18% nationally in 2009, while credit unions has risen 10% filling in the gap being left by banks. Rarely do bankers and credit unions see eye-to-eye. Credit Unions are cooperatives , not-for-profit institutions owned by its members, while banks are profit driven institutions owned by stockholders.

The message from credit unions to banks…if you are not going to lend to businesses in this economy, get out-of-the-way and let us fill the gap.

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