Wayward credit unions should re-evaluate

Legislation in Congress would give credit unions additional authority to make commercial loans. Credit union lobbyists argue such a move would expand credit to small business. Yet, the facts don't support their claim.

Credit unions already can make small business loans under $50,000 and loans guaranteed by the Small Business Administration without restriction, yet when compared to banks, credit unions remain a small player in both categories. In Iowa, only a handful of credit unions are near their lending limit, leaving more than $500 million in unused lending? authority.

The few institutions that could benefit from additional lending authority are fast-growing, banklike credit unions that have hijacked their not-for-profit charter to support an agenda that has little to do with serving individuals of modest means. American taxpayers, and those who represent them, need to decide whether an annual tax subsidy is still appropriate for billion-dollar credit unions making million-dollar commercial loans, while paying six-figure salaries.

Congress should encourage wayward credit unions to convert to a mutually owned savings bank. This solution would protect traditional credit unions, while bringing responsible regulation and appropriate taxation to those large credit unions that have abandoned their tax-exempt mission.

John K. Sorensen

President and CEO

Iowa Bankers

Association