Press Release
October 14, 2011
2 minute read


By Richard Newman/The Record
October 14, 2011

New Jersey’s credit unions, locked in a perennial turf war with banks, ramped up their marketing efforts this week to present themselves as potential job creators as they try to get the federal government to ease business-lending restrictions.

The New Jersey Credit Union League on Thursday started running online and radio ads to garner more support for proposed legislation that would more than double their statutory business lending limit to 27.5 percent of assets from 12.25 percent. New Jersey’s 1.2 million credit union members are “ready to help put America back to work” says one online ad.

“We are hoping New Jersey lawmakers wake up to the reality that small businesses need help,” said Paul Gentile, president of New Jersey Credit Union League. “We have a number of credit unions that cannot lend anymore.”

Four of New Jersey’s 15 U.S. representatives, including Democrat Steve Rothman of Fair Lawn, have signed on as co-sponsors of the bill, known as the Small Business Lending Enhancement Act.

Bankers trying to block the bill argue that raising the cap would give the non-profit cooperatives an unfair competitive advantage because, unlike most banks, they do not pay federal income taxes and are not subject to community reinvestment requirements.

The cap has been in place since 1998 and for years credit unions have been trying to have it raised. Now with tighter bank credit for small businesses, the bill is “gaining momentum,” Gentile said. It is unclear if and when it may be voted on by the House and Senate, he said. A subcommittee hearing was held Wednesday in the House.

Industry observers say the weak economy combined with large banks’ reluctance to lend and a tendency to raise fees presents an unusual opportunity for credit unions to expand their market share. “This is an environment with a unique economic climate that is very different from what we’ve seen in the past,” said Greg McBride, senior financial analyst for “At a time of serious long-term unemployment, anything that helps move the needle for job creation among small businesses is likely to gain support.”

The Credit Union National Administration estimates that raising the business loan cap would inject $13 billion in new credit for small businesses into the ailing economy and add 140,000 jobs within the first year of enactment — at no cost to taxpayers.

Credit unions, which generally have lower checking and ATM fees than banks, are also out to get checking-account customers from big banks.