Hawthorne's President Goes to Washington  
 

Hawthorne Credit Union's President Carl Sorgatz Invited to Testify Before the House of Representative Committee on Small Business - Subcommittee on Finance and Tax
 
Hawthorne Credit Union's President Carl Sorgatz is honored to have been chosen (on behalf of the credit union industry) to testify - tomorrow, Wednesday, April 30th - before the House of Representative Committee on Small Business: Subcommittee on Finance and Tax.  
 
"My main objective is to express the credit union industry's support for increased access to capital for small businesses, particularly in light of the current credit crunch," said Sorgatz, who is also the outgoing chairman of the Illinois Credit Union League (ICUL).  
 
Sorgatz will be speaking not only on behalf of Hawthorne Credit Union, which has branches in Naperville and Bolingbrook, IL, but also behalf of CUNA, the Credit Union National Association (CUNA), which represents approximately 8,400 state and federal credit unions, their State credit union leagues, and their nearly 90-million members.
 
"For nearly a century, credit unions have served the comparatively modest business lending needs of America's small businesses, which are the lifeblood of the US economy," said Sorgatz, who plans to encourage Congress to enact several bills currently pending that would help promote greater credit union participation in small business lending:  H.R. 1537, the Credit Union Regulatory Improvements Act (CURIA), H.R. 5519, the Credit Union Regulatory Relief Act (CURRA), and H.R. 1849, the Credit Union Small Business Lending Act.
 
"Despite the apparent 'credit crunch' with respect to small business and other lending, the chief obstacle for credit union business lending is not the availability of capital - credit unions are in general very well capitalized - it's the arbitrary statutory lending limits imposed by Congress in 1998 and the burdens associated with many of the SBA lending programs."
 
Sorgatz points out that, under current law, credit unions are restricted from member business lending in excess of 12.25% of their total assets.  This arbitrary cap has no basis in either actual credit union business lending or safety and soundness considerations.  Indeed, a subsequent report by the U.S. Treasury Department found that business lending credit unions were more regulated than other financial institutions, and that delinquencies and charge-offs for credit union business loans were "much lower" than that for either banks or thrift institutions.
  
"This cap is overly restrictive and undermines public policy to support America's small businesses.  It severely restricts the ability of credit unions to provide loans to small businesses at a time when small businesses are finding it increasingly difficult to obtain credit from other types of financial institutions, especially larger banks," explains Sorgatz. "The cap not only restricts the credit unions that are engaging in business lending and approaching their limit, but also credit unions who would like to enter the business lending market."
 
Sorgatz echoes CUNA official's assertion that the arbitrary cap effectively bars entry into the business lending arena because the startup costs and requirements, including the need to hire staff with business lending experience, exceed the ability of many credit unions with small portfolios to cover these costs. Today, only one in five credit unions have MBL programs and aggregate credit union member business loans represent only a fraction of the commercial loan market.
 
About Hawthorne Credit Union

Hawthorne Credit Union is a not-for-profit financial cooperative that has been serving members since 1935 with financial services ranging from checking and savings accounts to mortgages, auto loans, Visa credit cards, financial planning and small business services. Currently, the credit union serves more than 14,000 members at its two locations at 267 S. Weber Rd. in Bolingbrook and at 1519 N. Naper Blvd. in Naperville and via the campus branch at Alcatel Lucent. For details visit www.eHawthorne.org or call 630-369-4070.
 
Hawthorne was the recipient of the 2007 Best Bolingbrook Business award in the Finance category; winner of three 2008 CUES Golden Mirror Awards and the 2006 Dora Maxwell Community Service Award for Illinois.