SALT LAKE CITY – Last winter's tax brawl in the Utah state legislature that resulted in a March law triggering a ban on business loans and a flight from the state system, also created a previously unreported membership schism in the Utah League of Credit Unions, it was disclosed last week. At least two large Utah CUs – Cyprus Federal CU, Magna; University of Utah CU of Salt Lake, along with the smaller McKay Dee CU, of Ogden – resigned from the League in January after a policy dispute over "legislative direction and dues policies," conceded League officials. A fourth CU, the $358 million Utah Community of Provo and third largest behind America First CU, Ogden, and Mountain America of Salt Lake, had resigned a year earlier. "These are rock solid institutions and we want them back," declared Scott Earl, the League president and CEO, detailing the internal disputes that triggered board clashes as how best to fight the unrelenting banker challenge culminating in a July 15 American Bankers Association federal lawsuit and test case against NCUA blocking FOM expansion in Utah. That suit with CUNA and the National Association of Federal CUs as intervenors is now pending in a federal district court here The fight with Utah bankers proved "extremely frustrating," recalled Earl, creating deep philosophical differences on how the anti-bank campaign would be financed and waged under the League's dues structure. Earl said a new plan being put forward by a dues task force to be heard at a special membership meeting perhaps later this month "may satisfy" the CUs who resigned "or it may not." But with the battles against banks certain to continue in 2004, "it is extremely important that we get these credit unions back into the League," said Earl. John Palmer, president and CEO of McKay Dee, said he expects to meet soon with Earl to discuss the dues issue which he said created a fracture in the membership over "voluntary" and dues-based campaigns to pay for ad campaigns and lobbying expenses. Palmer said there were differences about how "pro-active or reactive" the anti-bank campaigns should be structured in light of the state's dominant GOP political environment, a factor in how CUs approached their legislators. On the political front, Earl said "dynamic changes" in the League's lobbying approach have been made including a reorganization of the organization's outside "contract lobbying force." In addition, political activism has been strengthened by the addition last April of Scott Simpson, the former executive director of the Utah Republican Party. Simpson is now svp for governmental affairs for the league. Other Utah CU executives said the resignation of all four CUs from the League related to squabbles over how much legislative attention was paid to the two largest CUs in the state, the $2.6 billion America First and the $1 billion Mountain America. "The credit unions who quit simply had a clique of their own and so they acted in concert," noted one CU manager. -

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