The Heartland Institute and 10 other free-market organizations have sent a joint letter to Senate Majority Leader Harry Reid, D-Nev., and Senate Minority Leader Mitch McConnell, R-Ky., asking that they take up legislation that would loosen regulatory constraints on the amount of loans credit unions can make to business members.
Sponsored by Sens. Mark Udall, D-Colo., and Rand Paul, R-Ky., S. 2231 would raise the business lending cap from the current 12.25% of a credit union’s assets to 27.5%. Companion legislation has been introduced in the U.S. House by Rep. Ed Royce, R-Calif.
“Doing away with these regulations would inject over $13 billion into the economy and foster the creation of up to 140,000 new jobs in its first year, all at no cost to taxpayers,” the groups wrote. “As the economy is struggling to kick-start, this bill would give businesses much-needed capital to expand by simply raising the arbitrarily low lending cap.”
While it’s true that most credit unions currently do not lend to businesses in a significant way, that is only because the current, burdensome lending cap makes it economically infeasible for them to do so. Sensible deregulation would allow many well-capitalized smaller credit unions to expand business lending. Finally, it simply boggles the mind to suggest that the banking industry as a whole would suffer any damage from this bill: banks currently have a 95 percent market share. Most of the new credit loans will almost certainly go to businesses that wouldn’t get any loans at all today, and credit unions would specialize in serving the types of businesses of their member populations.
In addition to Heartland, other signatories to the letter include the Competitive Enterprise Institute; Americans for Tax Reform; Less Government; Citizen Outreach; Institute for Liberty; American Commitment; Freedom Research Foundation; Freedom Action; 60 Plus Association; and the Council for Citizens Against Government Waste.
