Credit unions in the United States claim nearly 90 million members, many of whom cite benefits of dealing with a member-owned financial institution versus a commercial bank for routine savings and lending needs.
However, credit unions are making a big push into business lending, the traditional bailiwick of the banks. And the banks are pushing back.
Lending by credit unions to businesses is limited by law to 12.5 percent of total assets, a substantially more restrictive limit than that imposed upon banks.
But credit unions are different than banks in many important ways and benefit from a federal income tax exemption thanks to their membership structure. In recent years, these institutions have ramped up their lending to small businesses and are bumping up against the loan cap in some instances, especially at some of the larger CUs.
Legislation is pending in Congress to expand the limit to 27.5 percent of assets, and the banks are crying “foul.” The American Bankers’ Association decries the provision as unfair competition, since