Recently the president of a national bank used the following words to express his displeasure with certain Utah credit unions: "opportunists," "culprit," "loophole," and "skirt the law." A few weeks later, "The Resolution Alliance for Strong Banks and Credit Unions" appeared on the Utah scene. Led by a former U.S. Senator, the co-author of the Garn-St. Germain Act of 1982, this group depicts itself as a non-partisan group. However, its executive director is a former bank lobbyist, and all of its funding comes from banks. While outlining its position, the Alliance consistently refers to the 1983 "loophole." In one of its first news releases, the Alliance referred to certain credit unions as "culprits" that "break the rules." Three weeks later, this neutral party decided it was time to meet with credit unions. The use of those bank-like words and the late effort to involve credit unions did not endear the group to credit unions. As far as we are concerned, the Alliance is a rebirth of a similar bank front group created in 1999. We expect that early in 2003, bankers and their Alliance will assault credit unions with a mass media campaign and punitive legislation. This is the latest chapter in the Utah bank/credit union battle. In 1983, Utah's financial regulator determined to push the envelope when she allowed Utah credit unions to expand beyond the one county limitation in effect at the time. Perhaps she was inspired by her banking peers, who were aggressively "knocking down walls." In fact, in the bankers' own words, the walls that separated banking, insurance, and securities businesses, were "eroded by court decision, state action, regulatory envelope-pushing, and the simple ingenuity of the market." Senator Phil Gramm (R-Texas) stated that those "walls, over time, because of innovative regulators and because of the pressure of the market system, have come to look like very thin slices of Swiss cheese." Naturally, however, bankers objected to credit unions knocking down walls. In 1993, the Utah Bankers Association filed suit against the state finance department and all credit unions with fields beyond one county. Five years later, in 1998, the court ruled against the department's 1983 ruling. A 1999 legislative fix allowed the few credit unions that had expanded to retain their counties, members and branches. However, future movement within those counties became limited. The majority of credit unions had not expanded, and the bill snuffed out hope of that happening in the future. In 2001, as Utah credit unions approached the state legislature for some changes, the smoldering embers flared into the firestorm of debate that has continued to today. For years Utah banks have focused their attack on the exempted taxes that don't make their way to the school children. When describing the amount of the exemption, they use total federal and state figures or a 10-year total. This makes the actual $3 million figure appear larger. But there is really only one issue that concerns the banks – taxation, or the lack thereof, and how that relates to competition. Because Utah's corporate tax rate is 5%, people-both in and out of the movement-have questioned why we don't pay the 5% and get it over with. I submit four answers to that question: *In 2001 a Utah legislator proposed a bill that would have paved the way to tax "certain" credit unions at a 38% rate. The 5% state corporate tax will not appease banks. CUNA President/CEO Dan Mica said, "There's an important lesson for credit unions here. The lesson is not to cave in to some simple form of taxation for any reason, because once that happens, your tax rates can be increased." Credit union leaders must understand the potential damage that can be done by any seemingly insignificant loss. *A Filene Institute study entitled, "Taxation of Credit Unions." All credit unions leaders should be required to read the section detailing the taxation of the savings and loan industry. *Banker deregulation. Banks parlayed each state victory, each court victory and each regulatory victory into the final victory, the Gramm-Leach-Bliley Act, which abolished the restrictive 1930 laws. *Taxation is not, and should never be, an option for credit unions. In reality, taxation is not even an issue to Utah credit unions. It is a banker issue. More than anything the credit union issue is the limited ability to serve members. Utah credit unions recognize that a legislative fix to this problem is a long shot while a key legislative leader receives his paycheck from Utah's largest bank. A temporary solution for some credit unions is conversion to a federal charter. Three credit unions have recently made this change, with others contemplating the move. This cannot be the long-term solution. As Chairman Greenspan is a proponent for dual bank charters, credit union leaders must speak out in defense of the dual credit union charter. Each state must accept responsibility to create competitive state charters. Utah credit unions face some challenges as we seek a charter Utahns can be proud of. Legislators must understand the need for-and feel the need to promote-a competitive state credit union charter. We must have stamina in our efforts to educate and persuade them. Through these efforts, we must remain true to the principles that gave rise to our creation in the first place; while we excel at providing cooperative service to members, we will have to remember the principle of "cooperation amongst cooperatives." All of our efforts must be executed as a team-a team of small, medium and large credit unions cooperating for the benefit of the team. We know that the tax exemption is a Congressional gift to be used for the benefit of members-of citizens. It cannot be bartered away in exchange for a temporary reprieve from bank attacks. If the state legislature is not willing to understand that, the voters of the state will have the opportunity to make changes. At that time, Utah's banks will understand the power of democracy-credit union style.