Congress Considers Legislation To Allow Credit Unions to Expand Commercial Lending

Secured Lender, The, May/Jun 2006 by Cove, Brian P

Legislation has been introduced in the House of Representatives that would allow credit unions to expand their ability to offer commercial loans. The Credit Union Regulatory Relief Act of 2005 would increase the lending authority of credit unions by lifting the cap on commercial lending from 12.25 percent of assets to 20 percent of assets.

Critics of this legislation charge that raising the cap will cause credit unions to stray from their original mission of serving people of modest means. In addition, banking organizations have expressed concern that the legislation will give credit unions an unfair advantage over banks because they enjoy tax-exempt status not shared by banks.

Banking organizations, led by the American Bankers Association, America's Community Banks and the Independent Community Bankers of America, are lobbying strongly against this legislation as it winds its way through Congress.