LATHRUP VILLAGE, Mich.-Even as credit unions continue to struggle with getting MBL legislation passed in Congress, there remains strong support among many CEOs for a bill.
Indeed, Michael Poulos, CEO of $625-million Michigan First CU, is in favor of passing the bill, ultimately he would like to see CUs conduct business lending without any cap.
"There is enough regulatory oversight to make sure that each credit union has the appropriate type of resources to successfully achieve their business plan goals," said Poulos. "Credit unions didn't have a cap at all until the late '90s and there weren't any unusual failure trends. We have to be careful not to extrapolate the failures of a few into the failures of many."
Poulos added that he sees no reason for additional safeguards, such as charging CUs more for doing more business loans. "That type of thinking is dangerous and could lead to all sorts of unintended consequences. The NCUSIF is not risk-based and shouldn't be."
Doug Fecher, CEO of Wright-Patt CU in Fairborn, Ohio, stated he favors an MBL increase for CUs that have the experience and knowledge to effectively manage a safe MBL program. "WPCU does make member business loans, but at this point we are significantly below our cap, with just $55 million on the books compared to $2.4 billion in assets."
Fecher noted that if Wright-Patt's MBL balances were higher, he'd hate to have to turn away businesses that need help just because of some "arbitrarily set cap." As for banks' suggestions CUs lack MBL expertise, Fecher said, "I laugh a little at those banks...as if no bank has ever failed because of making bad business loans."