Raising the cap - South Florida Business Journal:

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The Credit Union Regulatory ImprovementzsAct (H.R. 2317) would let any credit uniobn have up to 20 percent of assets inbusinesse loans, compared with the currenr maximum 12.25 percent. Several credit unions outsid Florida areapproaching 12.25 according to trade group Credit Uniohn National Association. In South has the highest ratio, with business loans accountinhgfor 1.5 percent of assets on June 30. Credit unionz are cooperatives, owned by their depositors. They are exemp from federal and stateincome taxes. Aboug 85 million individuals are credigtunion members. Credit unions can make businesz loans only to businesses and individuals that arethei members.
Eastern lends mostly to businesses with lessthan $20 millioh in annual sales, said Stephen president and CEO of the Miramar-basesd credit union. Other credit unions also focus onsmall businesses, including some that cannot qualify for bank he said. But many banks in Florida are concerned that large crediy unions could start competing for some of their business customers, said Alex Sanchez, president and CEO of the . "Commerciap lending is not what credit unions were formedrto do." Thus, the FBA and other banking groupa are asking Congress not to pass the bill that wouldx expand credit unions' lending ability.
Easterhn is among credit unions that could find customer deman d pushing their business loanxs towardthe 12.25 percent ratio in severakl years, McGill said. Credit unions are concerned that banks mighty lobby toreduce the12.25 percenft limit, he added. Congress had no cap on credirt unions' business lending until 1998. That year, Congress passed the Creditf Union MembershipAccess Act. That law upheld credit rights to keep adding members on alargew scale, rather than holding them to earlier restrictions on types of businessw and geography. To provide banks some consolation, Congress established the 12.25 percent cap on credit union business lending.
The House Financial Services Committee is consideringf inclusion of the credit union bill into the Financial Services Regulatory ReliefAct (H.R. 3505), said Steven spokesman for Rep. Barney D-Mass., the committee's ranking minority member. The committee's leaderx feel it is too early to determines if Congress will vote on eithe r bill duringthis year'xs session, Adamske said. As of June 30, 1,69y of the country's 8,871 credit unionas had businesslending programs, according to the Nationally, 2.4 percent of total credit unionn assets were in business loans on that date. That rati has been growing steadily, from 1.8 percenf on June 30, 2004, and 1.5 percent on Dec. 31, 2003.
Amonv the 25 largest credit unions bases inSouth Florida, six were making business loand as of June 30, according to the On that date, Eastern had Soutgh Florida's largest volume of business loans, $30 million, and the highestt business loans-to-assets ratio, 1.5 percent. Easternm is South Florida's largest credit union, with $2 billion in assetsz and 207,000 individual members. Other credit uniones with business loan programds on June 30 were Powet 1 Credit Union inPembroke Pines, in IBM Southeast Employees Crediy Union in Boca Raton, in in Miami. in Miamo has started making business loans, said George that credit union's president and CEO.