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SALT LAKE CITY – Despite a last-ditch signature campaign by credit unions to defeat it, the Utah Senate passed 15-12 the controversial anti-CU resolution encouraging Congress to start taxing CUs and examining NCUA rulings. Undeterred by the vote which climaxed weeks of intense lobbying by both banks and CUs, the Utah League of Credit Unions vowed to carry the bank/CU fight to Washington by delivering 100,000 “Leave My Credit Union Alone” signatures of Utahans objecting to the resolution which passed the House Jan. 25. The resolution, the product of a joint 2004 House-Senate Financial Institution Task Force recommendation which the League charged as bank-tainted, asks Congress to look at permitting states like Utah to tax both state and federal CUs and set up two separate classes of CUs based on size as part of a long held banking strategy of distinguishing small CUs and so-called “mega” institutions. While the League has publicly charged the resolution is meaningless “like a letter to Congress,” it has warned Utahns that banks’ real mission is to wage a “relentless assault” on the very existence of CUs in the state, a claim denied by the Utah Bankers Association. Moreover, the League leadership sees a dangerous precedent set in Utah for the rest of the country if the bankers succeed in winning federal favor to undermine the tax exemption. The hope has been, said Scott F. Simpson, president and CEO of the League, “to slow the momentum as part of the bankers’ game” and on that score he expressed disappointment that it has gone this far and yet, the collection of more than 100,000 signatures “is pretty phenomenal and is pretty telling in itself.” “Doesn’t that set some kind of world record?” for signature-gathering, he asked. Hence, the Utah League has said it intends to bring the signatures collected on e-mails and in CU lobbies to the nation’s capitol just as it stationed a luggage cart inside the Utah capitol for lawmakers to see. In the meantime, the League’s TV and radio ads which began weeks ago attacking the resolution were halted but the collection of signatures was to continue, officials said. Both CUNA and the League noted the close margin of the resolution’s passing in both chambers (41-34 in House), indicating Utah lawmakers were repulsed by the bank/CU brawl. Moreover, CUNA said there are “early indications” that Congress and, in particular, the Utah delegation is giving this resolution “scant credence” With Utah a prime topic, CU members gathering for the GAC conference this week will be actively contacting their Congressmen “to maintain the tax status of credit unions,” said CUNA. Meanwhile, underscoring the heated rhetoric generated by the resolution, the Utah Bankers Association in a formal statement on the Senate action called it a valid work of the legislature despite “an unbelievably deceptive million dollar media campaign” waged by the League. “In the coming weeks, as the public examines the facts surrounding this resolution, they will no doubt wonder why the credit union lobbyists spent so much of their members’ money to mislead the public,” said Howard Headlee, president and CEO. The statement went on to say “the banking industry supports the credit union tax exemption” but added “we are simply focused on those very large institutions that are no longer operating like credit unions. Nobody here wants to tax real credit unions, but if Congress will focus on the real issue, we are confident they will come to the same conclusion as our legislature.” In a strongly worded Op-Ed piece appearing Feb, 20 in the Sunday Deseret Morning News – the day before the Senate vote – Simpson blasted Utah bankers and, in particular, Zions Bank for its “relentless assault” as the “instigator and financier” of the activity. Simpson in seeking to frame bank strategy as predatory charged Zions is trying to demonize the so-called “mega credit unions” for their expansion “in acting like banks”, while Zions and other Utah banks post record profits this year. “Zions alone – a single Utah bank-earned in a single year about five times the earnings of all Utah credit unions combined,” said Simpson. Utah credit unions, he wrote, “hold a mere 8% of all Utah deposits, and a minuscule 1% of all commercial lending” Though being demonized, CUs, he continued “are severely limited by law in commercial lending, are prohibited from offering many lucrative products and services offered by banks, and cannot issue stock but must depend solely upon member deposits to raise capital. “You can’t `act like banks’ when you are legally prohibited from doing most of what banks do to earn record profits,” he wrote. The Op-Ed piece concluded that a favorable vote by the legislature on HJR1 as the resolution is known “would send a meaningless `message’ to Congress, supposedly on behalf of the “people” of Utah.” “In response to this unrepresentative message, Utah’s credit unions have decided to send an alternate message – a Citizens’ Resolution on Credit Unions – that will more accurately express the will of Utah’s people. “Should legislators continue to turn a deaf ear and a blind eye to their constituents, and should HJR1 somehow pass, the banks’ message will go to Washington accompanied by this message from the “real” people of Utah.” repudiating HJR1. “More than 1,000 signatures repudiating HJR1 for every “yea” vote by Utah’s elected “representatives” should effectively counter this misguided, bank-sponsored resolution. “Though a majority of Utah’s Legislature may ignore its constituents, there is little doubt which message will echo loudest in the halls of Congress,” he concluded. Though the resolution was the prime issue before Utah lawmakers last week, a separate bank-sponsored anti-CU bill to limit field of membership expansion by CUs cleared a House Rules Committee though its fate was uncertain in light of the bitter fight on the resolution. The bill mirrors language in the July 2003 federal district court suit brought by the American Bankers Association against NCUA on a six-county expansion in Utah, an issue now before the agency. [email protected]

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