Anti-CU Resolution may Move Speedily in Utah House; Lawmakers Weary of Battle

SALT LAKE CITY – With strong influence from the banking lobby, the Utah legislature appeared to be moving quickly last week to adopt that controversial resolution asking Congress to intervene in the state’s acrimonious bank/CU fight over tax exemption and field of membership expansion. Early on, however, the Utah League of Credit Unions was buoyed by a close procedural House vote which would have killed the anti-CU resolution drafted by a banker-backed joint House-Senate Financial Institution Task Force last November. “Yep, it would have been a dead issue,” said Lynn Kuehne, executive vice president of the Utah League, commenting on a 37-36 floor vote to bury the resolution which asks Congress to “take appropriate action” regarding taxing both federal and state CUs as well as moving to overturn NCUA policy on FOM and CU powers. However, the House Business and Labor Committee by 10-3 on Jan. 18 voted the resolution to the House floor where favorable action was likely considering the House leadership, led by CU antagonist Rep. Jeff Alexander (R-Provo), has urged passage of the resolution. Alexander, sponsor of the resolution and of a restrictive CU law enacted two years ago which forced some 15 CUs to switch to federal charter, said the legislature’s goal is “a request for guidance and feedback” from Congress which to date it has not provided. Alexander said federal lawmakers need to “get into the battle and make some decisions.” However, League backers in the legislature, which still appear to be in the minority despite the squeaker Rules vote, maintain the Utah legislature is being “used” by the Utah Bankers Association and the American Bankers Association in a national campaign to block CU expansion. Still other Utah lawmakers said they were weary of the bank/CU clash and that Utah lawmakers would be adopting a “worthless” resolution by trying to drag Congress into a state matter “I’m sick and tired of the banks and credit unions boxing me in,” declared Representative Jim Ferrin, (R-Orem). “There is no vote I can take that will make anyone happy.” Representative Wayne Harper (R- West Jordan), who voted to bottle up the resolution in Rules, said the argument over CU tax breaks is strictly a federal issue. But Howard Headlee, president/CEO of the UBA, during debate before the House committee, urged passage of the resolution “so we can take this fight where it belongs: to Congress.” Countering Headlee were both Kuehne and Scott Simpson, Headlee’s counterpart at the League, who said the resolution is simply part of the “long term game plan” of the ABA to put down CU expansion while engineering a “false crisis.” The strategy of “picking away” at CU inroads in Utah is another element of the national campaign, said Kuehne. In furthering the UBA position, Headlee of UBA said that by adopting the resolution, the Utah Legislature would be reaffirming the intent of the Task Force findings supporting the 2003 Utah law “until further notice from Congress.” “There’s no new policy in the resolution,” since it changes no laws and “does not raise taxes,” he said, an argument refuted by the League which complains the resolution is a nefarious device to stir national debate over the tax exemption. In a motion to pass the matter on to the full House, Representative Michael Morley (R-Spanish Fork) expressed confidence in a Deseret News article on the voting that “both sides” have legitimate concerns, and yet picking up the banking line said “we have basically acquiesced our authority, our ability to regulate the larger credit unions, to the federal government. And we don’t have a clear direction at this point as to what they’re intending to do. “I think that it is appropriate to ask that we get some clarification and direction as to what the regulation is going to be,” he said. Beginning last fall, the League, through image/advocacy ads on TV, has strived mightily to drive home the CU position fully aware of the coming legislative onslaught. The League’s board along with Simpson for weeks have tried to marshal their collective lobbying and community muscle “to defend ourselves” cognizant it is an uphill battle in “a very hostile environment.” Credit union executives in the state also maintain they understand they are in a serious fight-for-survival battle as the rest of the industry watches. [email protected]