FEC Clears Utah's CUs Of Election Improprieties

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The Federal Election Commission said last week it will not pursue allegations of improprieties by the Utah League of CUs and eight of its credit unions for their unprecedented outpouring of support on behalf of the successful campaign of Rob Bishop during the bitter 2002 Republican primary.

The complaint was filed with the FEC by a supporter of Kevin Garn, the bank-supported candidate in the race and former Majority Leader of the Utah House.

Garn's supporter claimed that hundreds of thousands of mailers sent out by and $120,000 spent by the league and the Utah credit unions amounted to illegal in-kind contributions to a federal candidate. The complaint also questioned the legality of a $40,000 uncollateralized signature loan provided by America First CU to Bishop to help finance his campaign the week before the primary.

While only eight credit unions were cited in the FEC complaint, as many as 13 credit unions mailed hundreds of thousands of brochures-an estimated 250,000 in this congressional district of less than one-million people-and statement stuffers to members proclaiming their support for Bishop. In addition, credit unions sent dozens of employees to man phone banks.

The credit unions cited in the complaint included all of the state's largest: America First, Mountain America, Tooele FCU, Deseret First, Horizon, Goldenwest, Box Elder County, and USU Community CU.

But the FEC said the law did not require the league to report the costs associated with its newsletter as campaign contributions and thus, qualified as a membership communication by the league, addressing non-federal election matters. The federal regulator also ruled that costs associated with telephone polling and the neighborhood canvassing were similarly not required to be reported under the law, because the telephone poll did not qualify as express advocacy and the canvassing was unreimbursed volunteer activity

Based on vendor invoices, the league and the credit unions accurately reported all expenses incurred with direct mailings and recorded telephone messages on behalf of Bishop, the FEC said. And the America First CU loan was not unduly favorable.

The primary, which paved the way for Bishop's election to Congress, served as a proxy for the decade-old bank-credit union war in Utah. Bishop was former Speaker of the House and later served as a lobbyist for the league during its 1999 legislative battle on field of membership. Garn, a banker himself, supported the bankers' side in that legislative contest. Garn is also the cousin of former U.S. Senate Banking Committee Chairman Jake Garn.

Bishop's victory in the 2002 primary insured his win in the November general election in the heavily Republican district.

But just as important, the outpouring of support by the Utah credit unions served as a kind of blueprint of what credit unions can achieve when they invest significant resources in the political arena.

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