Congress should raise the lending limits for credit unions because it would help small businesses and create jobs, said Bill Cheney, president and chief executive officer of the Credit Union National Association.
“Credit unions are lending but they can do a lot more,” said Cheney, 50, in an interview at Bloomberg’s New York office. He became CUNA’s head earlier this month.
Credit unions are owned by their depositors and represent about 6 percent to 10 percent of total deposits held by financial institutions, said Cheney. The Washington and Madison, Wisconsin-based CUNA represents about 7,800 lenders and 92 million members.
Cheney, the former head of the California and Nevada Credit Union Leagues, said Congress should pass legislation introduced by Senator Mark Udall, a Colorado Democrat, to let credit unions make loans to small businesses up to 27.5 percent of their assets, compared with the current limit of 12.25 percent.
“It would free up $10 billion in lending to small business and create 108,000 jobs in the next year,” Cheney said.
Credit unions take deposits from their owner-customers and make loans to their members, who are typically small businesses, he said. Deposits in credit unions are federally insured up to $250,000 by the National Credit Union Share Insurance Fund, similar to the Federal Deposit Insurance Corp., which insures bank accounts.
The U.S. Senate is debating a small business aid bill, a version of which has been approved by the House of Representatives. President Barack Obama has been pressing Congress to push forward on initiatives to help small businesses in an attempt to encourage job growth.
The nation’s unemployment rate fell to 9.5 percent in June from 9.7 percent in May. Companies with fewer than 500 workers employ about half of the working population and account for 60 percent of gross job creation, Federal Reserve Chairman Ben S. Bernanke said July 12 at a conference in Washington.