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SB 2231: Should Congress expand credit union lending power?

Pro: This bipartisan bill will allow us to loan more money to businesses that need it

Debie Keesee And Alan Cameron

One of the main causes of the financial crisis was the lack of credit availability. Across the nation, businesses struggled to acquire the credit needed to operate. The result has been a massive loss of jobs that have not been replaced.

Credit is especially important to small businesses, which account for about half of all private-sector jobs. Small firms have generated 65 percent of net new jobs over the past 17 years.

Congress attempted to help banks restore credit with more than $400 billion from the Troubled Asset Relief Program and $30 billion in the Small Business Lending Fund, which was created so small banks could borrow at low interest rates and to make reasonably priced credit available to small businesses.

Community banks borrowed $4 billion from the small-business fund last year. Yet they actually reduced lending to small businesses by 1.84 percent. They used more than one-half the money withdrawn from the small-business fund in 2011 to repay some of their TARP loans.

Meanwhile, credit unions have increased their lending to small businesses by 44.91 percent during the economic downturn while contributing to local governments with our payroll taxes, sales taxes, property taxes and more.

Now, credit unions are asking Congress to take a small step that would cost taxpayers nothing while freeing up $140 billion nationwide for more small-business lending.

Senate Bill 2231 and a companion bill in the House of Representatives would raise the credit union business-lending limit from 12.25 percent of assets to 27.5 percent. These common-sense bills allow credit unions to lend more money to businesses that need it. The Credit Union National Association estimates Washington and Idaho would see nearly $477 million in new business credit, enough to create more than 5,000 jobs.

This is a bipartisan effort. The Senate bill is sponsored by a Democrat; the House bill is sponsored by a Republican. Co-sponsors come from across the political spectrum.

Who benefits from credit union business lending? Here are a few local examples:

The economy was still roaring when Suzanne Colman and Leanne Dixon purchased Harvard Park Children’s Learning Center North in 2006. Then the recession hit, people started losing their jobs, and enrollment dropped at the Spokane preschool. The owners turned to banks for help but were turned down. Finally, it was a credit union that restructured their business loans at lower rates, helping prevent layoffs. Today, the business is strong.

Nikki Belyea was a proven photographer and businesswoman when she decided to take the next step: acquiring studio space in Spokane. Her loan application was overlooked by two banks before she turned to a credit union in 2007. Since then, she’s photographed more than 120 weddings, and the studio has helped her develop a thriving portrait business as well. She named her business Moxie Images, reflecting her own spunk and spontaneity.

Mike and Jessica Huey wanted to turn their well-established business into one that would draw customers year-round. So they built at a new location in Spokane Valley and added fireplaces to their lineup of pools and spas. Banks weren’t interested in helping with the transformation of Aqua Elite Pool & Spa & Fireplaces, so the Hueys turned to a credit union. The result: “Our business is looking at a very strong 2012,” Jessica Huey says.

With Congress’ help, credit unions can continue to assure a strong future for local entrepreneurs and the people they employ and pave the way for even more jobs and more strength in our local economies.

Debie Keesee is vice chair of the Northwest Credit Union Association andCEO of Spokane Media Federal Credit Union. Alan Cameron is CEO of the Idaho Credit Union League.
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