Banks challenge move
Banks, however, say credit unions have strayed from their original mission of providing financial services to people of "modest means."
Wisconsin now has seven credit unions with assets of $1 billion or more.
Oswald Poels said banks are in the business of lending money, and if good companies need loans, banks will make them. She said the effort to allow more business lending "is really being driven by a small group of very large credit unions that are no different than banks and should be taxed like banks."
"I think it is an exaggeration to say there is all this demand out there that is not being met," she said.
She said business borrowers generally don't want to take on more debt today because they don't know which direction the economy is headed.
If the cap is raised, credit unions definitely will do more commercial lending, said banking analyst David L. Donihue. But because many banks have solid relationships with their borrowers, a lot of customers will be reluctant to switch, he said.
"The banks are going to lose some business, but I don't think you're going to see a mad rush," said Donihue, managing director of Maximizing Shareholder Value & Co. in Leesburg, Fla. "It's a relationship. I want to make sure my loan officer knows who I am."
Thompson said most of the business loans that credit unions are making are too small for banks to be interested.
"The average size of credit union business loans in Wisconsin is $176,000, so we are not talking about huge, huge loans here to compete with many of the banks," Thompson said. "We are talking about very small loans. To be frank, a very high number of members who come in looking for loans have been turned down at their bank because the bank does not want to deal with such small credit."
Thompson said banks would remain by far the biggest business lenders in the state.
Nationwide, credit unions estimate that raising the cap would generate an additional $13 billion for small businesses and help create more than 140,000 jobs.
Thompson noted the legislation, which is in committee in Congress, would need to be considered by both the Senate and House.
The proposal has the support of organizations such as the National Association of Realtors. Its co-sponsors in the House are bipartisan, including U.S. Rep. Thomas Petri, a Fond du Lac Republican, and Madison's Democratic U.S. Senator-elect Tammy Baldwin.
Both sides are mobilizing their constituencies to contact their congressmen about the bills -- H.R. 1418 in the House and S. 2231 in the Senate -- as the credit unions make a major effort to pass the legislation before the 112th Congress ends its term.
"We've been working on this issue for close to 15 years and we have very high hopes that something can happen," Thompson said.
Said Oswald Poels: "I think there's this looming threat of it being brought up for a floor vote, and the threat seems a little more real now than it did before."
(c)2012 the Milwaukee Journal Sentinel
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