Credit union loan limit receives support

10/27/2011

Houston, Texas Representative Sheila Jackson Lee recently announced that she's backing legislation that would open $13 billion for business loans and create around 140,000 new jobs, the Houston Chronicle reports.

Lee discussed her stance at a recent Greater Heights Area Chamber of Commerce monthly business luncheon. House Resolution 1418 - the Small Business Lending Enhancement Act - would modify the Federal Credit Union Act to increase CU's lending cap from 12.5 percent to 27.5 percent.

"I want to see the economy rolling again," Jackson said, adding that because larger banks have trillions of cash reserves, there wouldn't be a conflict with CUs increasing local loans.

According to the Credit Union Times, the bill requires that CUs be at or above 80 percent of the current cap, have five or more years of lending experience and be able to demonstrate "sound underwriting and servicing." If a CU's net worth ratio dips below 7 percent - the current well-capitalized requirement - they'd be required to stop making new business loans.

The proposal currently has 86 co-sponsors in the House and 21 in the Senate.