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Credit Unions Would Lend More if the Politicians Would Allow It

The credit union industry -- 7,000 state and federally-chartered U.S. institutions -- counters that there isn't much overlap, i.e., reasons to be worried about market share.

"Obviously, the loans we're making are considerably smaller," Mellin says. "A lot of the loans we're making, frankly bankers aren't interested. Our average is $250,000."

In fact, the average size of credit union loans at year-end 2012 was $217,000, according to the Credit Union National Association, the industry's trade association. Credit union member-business loans represented just 1.5% in market share of total credit union/bank business related loans, CUNA says.

So essentially doubling the lending caps for credit unions wouldn't move the needle drastically in the small business loan market, argues John Magill, CUNA's executive vice president of government affairs.

"We've been working on this for several years,'" Magill says. "We got really close ... particularly in the last Congress, but still the legislation wasn't able to get up to a vote in the Senate. I get the sense on the Hill the masses are getting angry with a do-nothing Congress and they want to show some movement."

Several Congressional members of the House and Senate continue to pledge support for legislation. On the Senate side, longtime proponent, Sen. Mark Udall (D., Colo.) plans to reintroduce a proposal seeking to relax the member business lending caps.

"There's great support for it," says Alex McCarthy, press secretary for Senator Udall. McCarthy couldn't give an exact date on when the senator plans to introduce the bill.

In February, Rep. Edward Royce (R., Calif.) and Carolyn McCarthy (D., N.Y.) re-introduced the idea under H.R. 688, The Credit Union Small Business Jobs Creation Act. Reps. Royce and McCarthy were joined by 34 additional co-sponsors on the legislation.

-- Written by Laurie Kulikowski in New York.

To contact Laurie Kulikowski, send an email to: Laurie.Kulikowski@thestreet.com.

>To submit a news tip, email: tips@thestreet.com.

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