Utah CUs, Banks Engage in FOM/Business Loan Clash
SALT LAKE CITY -- Utah credit unions and banks were locked in delicate negotiations with state lawmakers last week to resolve a brewing clash over proposed changes to state laws aimed at easing business lending and field of membership limits.
"I have great confidence that there are several legislators, including those in leadership, who are making every effort to get something done," declared Scott Simpson, president/CEO of the Utah League of Credit Unions.
Early last month, the league intimated it was looking at a public referendum this fall on CU powers coupled with special consumer provisions to cap ATM surcharges, return check fees and payday loans, all viewed as a way of breaking the banker-imposed impasse on CU expansion.
The league said proposed bills in the legislature now would increase the amount a credit union can loan to its members to 10% of assets from the current 1%, and eliminate a requirement that borrowers be CU members for six months before receiving a business loan.
In addition, league bills would raise the business loan limit to 12.25% of a CU's assets from its current limit of $250,000 per member.
While scoffing at the notion of a "Financial Freedom Ballot Initiative," the Utah Bankers Association said it was willing to negotiate with the league on provisions in the bills but it reserves the right to vigorously oppose giving broad, new powers to what it called "bank-like credit unions."
Citing the right of state CUs to convert to a federal charter to seek redress, Howard Headlee, the president of the UBA, referred to a series of articles on the referendum idea and the CU/bank dispute appearing in Salt Lake papers in recent weeks, resulting in calls from Utah legislators for the two sides to make peace. Calling the positions of the two sides "posturing" and urging they seek common ground, Senate Majority Leader Curt Bramble (R-Provo) acknowledged in the Salt Lake Tribune that CUs and banks are very "different types of institutions and both play a vital role in the state's economy."
For his part, Headlee said bankers "would like to resolve our concerns with the league without wasting energy of the legislature but we think it is a poor way to conduct negotiations by using the media."
Headlee reiterated that his association has no quarrel with the "small, traditional credit union" but objects strongly to the tactics of large CUs in the state.
He said UBA has "made a very generous offer, but it is limited to the traditional credit unions that are operated within the spirit of the law."
In this session of the legislature, ULCU's Simpson has said it is looking "for any opportunity to roll back the punitive measures of our state charter" and if need be "will go to the people" in a referendum.