Credit Unions Suspect 'Broker' in Bank Fight

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A group billing itself as "an honest broker" in the struggle between Utah banks and credit unions says it is not a mouthpiece for bankers - even though it is funded by them and pays for radio ads attacking credit unions.

The Resolution Alliance for Strong Banks and Credit Unions was co-founded by former Salt Lake City Mayor Ted Wilson and former Sen. Jake Garn, R-Utah. The group, which says it simply wants to help make peace between the two industries, offers its agenda in more detail at www.resolutionalliance.org.

Banks have succeeded in putting limitations on state-chartered credit unions in Utah. A former bank-sponsored group, Utahans for Fair Taxation, sought to restrict credit unions' growth and revoke their federal tax exemptions. The Resolution Alliance calls for only the state's two largest credit unions to lose their exemptions.

For years Utah was the model of wide-open fields of membership for state charters. But in 1999 the Utah Bankers Association scored a victory when the Legislature passed a bill essentially restricting each credit union to its home county. Those that had gone into other counties could remain but not expand there.

Maura Carabello, the Resolution Alliance's administrator, conceded that it will have a tough time persuading credit unions that it is neutral given its source of funding and ties to the Utah Bankers Association.

The Resolution Alliance has said that its aim is to bring credit unions and banks together for discussions. But according to Scott Earl, the chief executive of the Utah League of Credit Unions, before the alliance had even contacted any credit unions it began running negative radio ads targeting them in general and $1 billion-asset Mountain America Credit Union and $2.3 billion-asset America First Credit Union in particular.

"They talk about credit unions breaking the rules, but there are no credit unions out there breaking rules," Mr. Earl said. The Resolution Alliance "could have stepped into this as a third party, but not the way they did this. They went to the banking industry first, then they went to the media, and only now have they finally come to us. How is that supposed to be neutral, honest, and fair?"

Ms. Carabello said that the alliance wanted to get community leaders on board first, then bring banks and credit unions to the table.

The tone was cordial at the Resolution Alliance and the Utah League's first meeting last month, but it was not particularly productive, Mr. Earl said. "Neither of the two principals was there, just their messenger, so there was no way we were going to get anything done."

As for his impression of the alliance and its mission: "I don't trust their motives," he said. "If they are serious about being an honest broker, then they should pull their radio spots as a sign of good faith."

Credit unions question the Resolution Alliance's objectivity. They point out that Ms. Carabello used to work for the Utah Bankers Association and was recommended to the top post at the alliance by Howard Headlee, the president of the trade group and an outspoken critic of credit unions.

Ms. Carabello insists, however, that she is "more a credit union person than a bank person.

"I worked for the UBA for three months as an independent consultant - that's it," she said. "I'm a Democrat. Ideologically, I feel closer to credit unions than to banks."

She said that she understands why credit unions are wary of her ties to the Utah Bankers, the Resolution Alliance's links to the trade group, and its intentions. "We're only talking about credit union statute, not banks, so of course that puts them on the defensive."

Ms. Carabello said the alliance's goal is to end the long conflict between Utah banks and credit unions, which she says is hurting the state.

"Both banks and credit unions are pouring tremendous amounts of time and dollars into this, and it's distorting our entire political system in Utah," she said. "We don't claim to know the answers, we just want to facilitate open dialogue between these two industries."

Mr. Earl noted that the Resolution Alliance calls for compromise only from the credit unions. When you listen, he said, "it's all banker rhetoric."

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