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Oklahoma banking, credit union officials debate merits of federal bill

Oklahoma banking and credit union officials disagree on the effects and merits of pending federal legislation, which would boost lending limits for credit unions.
by Don Mecoy Published: April 22, 2012

Roger Beverage, president of the Oklahoma Bankers Association, admits he might have been a bit harsh when he recently referred to credit unions as “tax-dodging” institutions.

“That's probably over the top on my part,” Beverage said. “But I do it to make sure I get people's attention.”

Beverage's rhetorical flourish is part of long-running battle of words between banks and credit unions that has erupted again because of pending federal legislation that could boost the size of loans credit unions can make.

Gary Jones, president of Credit Union Association of Oklahoma, said allowing credit unions to make more business and commercial loans would create more jobs and enhance the U.S. economy.

“The members of the credit unions have not been able to get money from the commercial banks because generally they're not of a size that they (the banks) are even interested in,” Jones said. “Our members have come to us and said we'd like to have some money for our business, and there is an artificial cap on what we can loan that we know is restricting our ability to respond to these requests from our members.”

Tax exemptions

Credit unions, which are nonprofit organizations, are exempt from state and federal taxes. That's a major thorn in the side of bankers, who believe increasing the size of loans that credit unions can make could cost their banks business, Beverage said.

“Their effort to get into commercial lending is nothing more than poaching existing business that already resides with taxpaying banks,” Beverage said.

The proposed law

The Small Business Lending Enhancement Act being considered by Congress would benefit only the very largest credit unions, and could be “the beginning of the end for small community banks,” Beverage said.

Credit unions currently are barred from issuing business loans in excess of 12.25 percent of their total assets. The bill would raise that business lending cap to 27 percent. Credit unions argue that allowing them to make more loans will help small firms hire, claiming that will create 140,000 jobs nationwide.

Jones said the bill would “relax the artificial restriction” contained in a 1998 bill.

“The idea is that this economy is needing jobs to stimulate growth, and the credit unions serve their members as a cooperative,” Jones said. “I don't hear PSO clamoring to tax the electric cooperatives. It's just really kind of odd that people would talk about someone in their space that happens to have a different structure.”

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by Don Mecoy
Business Editor
Business Editor Don Mecoy has covered business news for more than a decade after earlier working on The Oklahoman's city, state and metro news desks, including a stint as city editor. He has won state and regional journalism awards for business,...
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By the numbers

In Oklahoma, there are 235 FDIC-insured banks and savings institutions. There are 71 credit unions in the state, with a total of about 1 million members.

Basically if you're vertical today you can qualify for membership in some credit union — I don't care where it is.”

Roger Beverage

President and CEO of the Oklahoma Bankers Association


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