Performance of NY Credit Unions Underscores Need for MBL Reform

December 4, 2012 at 7:18 am Leave a comment

imagesCAUAGDBCNCUA released its quarterly snap shot of credit union performance across the nation and credit unions in NYS can justifiably pat themselves on the back for a solid performance.  Most noteworthy is our loan growth of 8%, which exceeds the national average of 4.3%.  The only states of comparable growth are a handful of smaller states mainly in the mid-West.

Several points can be extrapolated from this information.  While we should give ourselves credit, we should also take an honest look at the bigger picture.

  • In a strange way, the State shows that Keynesian economics works.  For the nation as a whole, the bank bailout was just that, a bank bailout.  For New York, it was a job protection program and as severe as the cutbacks in the financial services industry have been in recent years for some companies, it has not been nearly as severe as it would have been had these institutions not been bailed out.  In addition, while New York faced severe fiscal problems, they would have been even worse had the bailout not taken place.  Don’t underestimate the extent to which our budget is dependent on Wall Street bonuses.
  • The major argument of the bankers against MBL expansion is that there is no need for it considering how few credit unions are up against the MBL cap.  But as the strong loan growth indicates, now is the time to be maximizing the ability of all financial institutions to lend to small businesses, not to put up regulatory road blocks.  There are already credit unions that take on fewer business loans than they would but for the cap and I know of at least one major credit union that doesn’t do any member business lending at all because it makes no sense to enter into a line of business that has an artificial ceiling.
  • We continue to look for ways to invest our money in the communities in which we live and control the fees that we charge to our members.  Lending is one of the most basic ways of doing this and business lending is one of the areas of potentially greatest growth, particularly in a state like New York, which may be one of the first states solidly out of the recession.  Why not maximize the choices that the small business owner has when shopping for loans rather than giving the banking industry a monopoly over his or her business?

If it’s good enough for Lindsay Lohan. . .

Next time you get a self-righteously indignant member screaming at a teller for the IRS levy placed on her account, the teller should, of course, remind the member that 1) the credit union is just following the law and 2) even major stars are subject to restraints.  As shocking as this may be, it is being reported that Lindsay Lohan has neglected to pay her taxes and that her account has been levied by the IRS.  On that entertainment note, have a nice day. . .

Entry filed under: Advocacy, Economy, New York State, Regulatory. Tags: , , , .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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