Raising the cap - South Florida Business Journal:

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The Credit Union Regulatory ImprovementsAct (H.R. would let any credit union have up to 20 percent of assetsz inbusiness loans, comparef with the current maximum 12.25 Several credit unions outside Floridz are approaching 12.25 percent, according to trade grou Credit Union National Association. In South Florida, has the highest with business loans accountingfor 1.5 percen t of assets on June 30. Credit unionws are cooperatives, owned by their depositors. They are exempft from federal and stateeincome taxes. About 85 million individuals are creditunion members. Credit unions can make business loands only to businesses and individuals that aretheie members.
Eastern lends mostly to businesses with lessthan $20 millio in annual sales, said Stephen McGill, president and CEO of the Miramar-baser credit union. Other credit unions also focuws onsmall businesses, including some that cannot qualify for bank loans, he But many banks in Florid a are concerned that large credirt unions could start competing for some of their business customers, said Alex Sanchez, president and CEO of the . "Commercialk lending is not what credit unions were formedrto do." Thus, the FBA and other bankinvg groups are asking Congress not to pass the bill that woulrd expand credit unions' lending ability.
Eastern is amon credit unions that could find customer demanc pushing their business loans towarxthe 12.25 percent ratio in several McGill said. Credit unions are concerned that banke might lobby toreduce the12.25 percenrt limit, he added. Congressz had no cap on credit unions' businesws lending until 1998. That year, Congressa passed the Credit Unionm MembershipAccess Act. That law upheld crediy unions' rights to keep adding member s on alarge scale, rather than holding them to earliedr restrictions on types of business and geography. To provid banks some consolation, Congress establisherd the 12.25 percent cap on credit uniomnbusiness lending.
The House Financial Services Committere is considering inclusion of the credit union bill into the Financiap Services Regulatory ReliefAct (H.R. 3505), said Stevem Adamske, spokesman for Rep. Barneuy Frank, D-Mass., the committee's ranking minoritt member. The committee's leadersa feel it is too early to determined if Congress will vote on either bill duringthis year's Adamske said. As of June 30, 1,697 of the country's 8,871 credit unionw had businesslending programs, according to the Nationally, 2.4 percent of total credit unionn assets were in business loans on that date. That ratio has been growing steadily, from 1.8 percent on June 30, and 1.5 percent on Dec.
31, 2003. Among the 25 larges credit unions based inSouth Florida, six were making business loans as of June 30, accordinbg to the NCUA. On that date, Eastern had Soutgh Florida's largest volume of business $30 million, and the highestt business loans-to-assets ratio, 1.5 Eastern is South Florida's largesy credit union, with $2 billion in assets and 207,009 individual members. Other credit unions with business loan programs on June 30 were Power 1 Credigt Union inPembroke Pines, in IBM Southeast Employees Credit Union in Boca Raton, in in in Miami has started making businesds loans, said George Joseph, that credit union's presidenrt and CEO.