...But Utah Legislature Presses On With Its Own
One petition that is not expected to go very far is one the Utah legislature is preparing that would ask Congress to step into the Utah banks' long-time war with credit unions on behalf of the banks.
Credit union opponents started the new legislative session off last week with their much-anticipated anti-credit union initiative calling on Congress to let the states tax federally chartered credit unions, among other things. But Congress, including Utah's small, but powerful congressional delegation, has expressed little interest in weighing in on the fray, even after the federal court ruled last month that NCUA overstepped its bounds in granting four Utah credit unions broad community charters.
Fueling the resolution was the successful escape of at least 10 Utah state-chartered credit unions from the 2003 tax trap carefully laid by the Utah Bankers Association and their legislative allies that would have taxed large credit unions. Those credit unions successful converted to federal charters, making them exempt from any state taxes and rendering any initiative to tax credit unions in Utah almost meaningless. The well-publicized escape by the credit unions not only deprived Utah state coffers of millions of dollars in state sales taxes, but served as a gesture-credit unions thumbing their noses-at their long-time foes in the banking industry.
House Joint Resolution 1, introduced by Republican House Majority Leader Jeff Alexander, sponsor of the unsuccessful 2003 bid to tax large state-chartered credit unions, asks Congress to weigh in on the decades-long fight between credit unions and banks in this state. The resolution is based on a measure endorsed by the legislature's Financial Institutions Task Force and urges Congress to "take appropriate action" regarding the regulation of credit unions; allow individual states to determine which state and local taxes should apply to all financial institutions within their borders; and provide a "reasoned" explanation if Congress decides to keep the current tax structure in place.
Alexander said the intention of the resolution is to have Congress review NCUA's regulatory activity, especially in light of the recent court ruling invalidating the agency's broad community charters.
The non-binding resolution must be approved by the state Senate and House before it is presented to Congress.