jobs created are from small businesses. Access to capital is one of the major challenges facing small businesses and is preventing them from investing, hiring, and increasing production. And loans are hard to come by for many small business people, who desperately need them to expand their businesses. In many cases, the only way small businesses can get access to capital is through small credit unions. This is why I co-sponsored H.R. 1418, the Small Business Lending Enhancement Act of 2011, which would increase the lending cap on credit unions. What role do you see for credit unions in serving the people of Florida, and how do you see them as part of the economic recovery? The two million small businesses we have in Florida account for 75 percent of the state’s gross domestic product. These businesses are an essential component of Florida’s economy. The financial needs of small business owners are complex and vary among industries. Credit unions tend to have a local focus and therefore, have a comparative advantage when tailoring to the specific needs of individuals and businesses in their community. The proof is in the numbers; credit unions in Florida added 43,000 new members and increased business loans by three percent in the second quarter of 2012. Not-for-profit credit unions have been able to serve more Floridians and aide in the economic recovery by minimizing fees and delivering more personal service than other financial institutions. Aside from H.R. 1418, what major issues do you believe financial institutions such as credit unions should be watching? Regulatory compliance is my biggest concern for the financial industry’s future. The 2300-page Dodd-Frank Act is a prime
example of onerous Washington regulations hurting community banks and preventing a full recovery in the housing market. Although Dodd-Frank has not been fully implemented, we are starting to notice the effect it has on stifling growth and lending. For example, financial institutions have already started hiring compliance officers which charge hundreds of dollars an hour just to navigate through the maze of Dodd-Frank regulations. These are costs that are passed on to all of us. Small banks and credit unions feel the pain worse than the big banks- they have even less money to lend because of these regulations and the local economies they serve suffer as a result, not to mention the small banks themselves. If you could give one piece of advice to grassroots advocates for credit unions, what would it be? The market for lending institutions is rapidly changing due to innovations in social media and the Internet. Peer-to-peer (P2P) lending is a one billion dollar industry and has seen over 100 percent growth year over year. Because banks are not lending freely and more consumers are looking to get out of credit card debt, institutional investors are moving in and earning double-digit returns in the social lending markets. On March 22, 2012, the Jumpstart Our Business Startup (or JOBS) Act was signed into law; it included a crowd-funding provision that was key to opening up the market. Websites like Lending Club or Kickstarter, now have the potential to compete in this space. These innovations in online banking provide an excellent opportunity for credit unions and small banks to expand their access to the virtual market and to expand their consumer base. I would encourage credit union advocates to encourage their lawmakers to keep these markets free from excessive government interference. ■
(l to r) Cindy Ross, Cong. Ross’s wife, Art and Mary Wood, and Rep. Ross.
SIGNAL: Vol. 3, Issue 4
www.lscu.coop
21