Reading Reflections #3 – Assignment Example
The article talks about credit unions wanting to have more capability to offer loans, especially to small businesses. This request to Congress is nota new one but has recently gotten a new push due to the low performance of banks on acquiring loans. The banking industry does not favor the appeal. They claim that to give credit unions a higher lending cap would result to a smaller market share. On the other hand, the credit unions argue that the banks are not doing enough. This is because of this year’s low small-business lending figure.
I think Congress should approve the request for higher cap. Small businesses apply for loans to make their enterprise grow. As an example, the article talked about how a barge terminal owner was denied a business loan by a credit union because of the cap but was offered a personal loan instead. This loan helped him start on the tugboat he needed to boost his company’s income. If the cap was raised, the credit union could have given the operator the total loan amount he needed and could have saved him the time he spent saving up to make the difference. For business people, time can be an important factor in a business move.
Moreover, I believe that enabling credit unions to give higher loans will generate more income for the businesses. This increase in revenue would result to increase in taxes. The government will then be able to use these additional taxes to fund programs it deems necessary for the country’s growth. Indeed, in the world of economics, the banks should play the major role in generating this aspect of income for the government. However, in my opinion, the progress of small businesses should not be hindered by this if, in the end, it is society that will benefit. From this article I have learned that loans must be an important part in business if lending institutions have to quarrel over which organization must be capable to offer them. I have also learned that more attention should be given to the recipients of the loans instead of the lending institution’s loss in market share.