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SALT LAKE CITY – The ongoing credit union-bank feud in Utah, which could draw national attention from CUNA, has heated up again with the formation of a new bank-funded organization aimed at focusing lawmaker attention to the tax-exempt status of CUs in the state. The latest bank-led barrage including TV and newspaper ads and letters to both banks and CUs has the backing of the Utah Bankers Association, but it’s led by a new group, the “Resolution Alliance for Strong Banks and Credit Unions” The Alliance has as its backers, two high profile Utah leaders, former GOP U.S. Sen. Jake Garn, chairman of the Senate Banking Committee, and former Salt Lake City Mayor Ted Wilson, a Democrat. The Alliance, which claims it wants to put an end to the bank-CU wars, reduce the “tension” and provide “a reasonable voice in the debate among financial institutions” over competition and the tax issue, has its own Web site and has been conducting a vigorous media blitz in Salt Lake City with ads and news coverage since Nov. 9. The Utah Credit Union League, which is running counter ads, has called the Alliance a pure “front” for the UBA and claims the new bank attack is the result of losses in the Nov. 5 election which saw U.S. House candidates backed by the banking lobby go down to defeat. The League also contends the Alliance effort is a harbinger of an expected fight in the state legislature in January over the tax issue. The Alliance literature takes particular aim at the state’s two largest CUs, America First CU and Mountain America, for “going too far” in trying to become unregulated banks and accuses the two of promoting products and services not allowed under their charter. These two CUs, “should convert” their charters and “begin to pay taxes and become subject to all the regulations” that apply to banks, the literature reads. The president and administrator of Resolution Alliance, Maura Carabello, a former independent consultant for the UBA, characterized the two CUs as “culprits” in the bank-CU dispute, adding that containing them “will make small credit unions stronger.” Both America First and Mountain America, which have denied they have “broken the common bond” tie, maintain they are cooperating with the League in helping fund the League’s own counter marketing campaign to thwart the Alliance ads. James Hofeling, chairman of the League and president of the $120 million Jordan Credit Union in Sandy, acknowledged that Utah could be the next national battleground for the tax issue and that CUNA’s possible involvement was to be considered at a League Board meeting last week. “CUNA helped out once before,” he said, in a fierce 1999 state legislative fight and court action over field of membership issues arising from H.R. 1151. Though the UBA has long claimed there are CUs in the state supporting its position against America First and Mountain America, Hofeling said he knew of no CU that supports the Alliance message. The tactic of “divide and conquer” does not appear to be working, he observed. Officially, the Alliance requested a meeting only last Friday with Scott Earl, the president of the League to talk about peace with the request coming after the first series of ads appeared. The League disclosed early last week that a meeting with Alliance officials was set for last Tuesday. Attending the meeting from the League was Earl and Brooke Moea’I, senior vice president of dues support and services. Regarding Garn and Wilson, Earl has said the highest respect for the two leaders but he questioned the objectivity of the Alliance. The Alliance administrator, Carabello, has an e-mail address at the UBA, sources pointed out. Hofeling said CUs appear to be “unified and standing together” and that while the ad blitz “is costly” the League is committed to continuing the battle “as a matter of principle.” Like it did with savings & loans, he said the banking industry seems to need “a common enemy to go after some one else” as a kind of “rallying point.” “Whatever ads we have to produce we want them to be positive and timely” and to present the correct CU message to the public, said Hofeling. Regardless, the banker attacks “will not go away,” a fact that CUs must recognize. -

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