The Utah League of Credit Union's new CEO Scott Simpson has a promise for CUs here and across the nation: Utah will not be a stepping stone in banker efforts to tax credit unions.
"My primary goal is that Utah not become a toe hold for banks in their national fight against credit unions," Simpson told The Credit Union Journal. "Utah is not going to be the model that banks can hold up in other states or at the national level."
But ensuring that he can make good on that vow won't be easy. "The banks have about a 100-year head start on credit unions," Simpson explained. "They created the chambers of commerce. They've been heavily involved in politics for a very long time. They have invested heavily in the legislative leadership, and that investment has paid off handsomely. For years, credit unions went their merry way doing what they do best: serving their members, and then suddenly, they started getting smacked around in the legislature. The league here has had to mature in a very short time, and considering how quickly that all had to happen, the league has done a great job."
The Gloves Are Coming Off
Which is why, as Simpson steps into the office so recently vacated by long-time CEO Scott Earl, the league's gloves are coming off.
"We have to undo the thuggery that has been done to Utah's credit unions: thuggery," Simpson asserted. "What we have to convince legislators is that what they've done is passed meaningless legislation, and more than that, they've broken the system. We've had about eight conversions from state to federal charter last year, and we now have between 80% and 90% of credit union assets in this state now under the federal charter."
And that's something lawmakers weren't banking on, Simpson noted. "When the bankers were working to get taxation legislation passed, the legislators were assured that [mass conversions to federal charter] couldn't happen, that they wouldn't be allowed," he said. "They didn't believe that there was a viable escape hatch. But the federal charter is an option. If the legislature imposes a tax on credit unions, it will all be for naught, because the federal charter is an option."
Those conversions also served up an important message to lawmakers: maybe what banks have been saying about credit unions isn't true.
"These conversions, the fact that they were allowed, has proved to local leaders that credit unions are defined a little differently than how bankers define them. It shows that the world sees credit unions in a much different light than the bankers would have them believe."
Simpson has been with the league a little less than a year, coming to the ULCU from the state's Republican party.
"Utah is a Republican state, and most of the problems credit unions have had have come from the Republican side of the aisle," Simpson noted. "With my background, I have good relationships with a number of Republican lawmakers, and that's a big part of what I bring to the table. You couldn't have been involved in Utah politics without developing your own opinion on the credit union issue. I have been a credit union member for years, and it became obvious to me what was going on. Some might question my move to the league, but what's great about working with credit unions on this is that we have the luxury of being right."
All Quiet On The Credit Union/Bank Front
With the legislative session gearing up for a Jan. 19 start, all is preternaturally quiet on the credit union/bank front. "We are not going to push for anything in this session," Simpson offered. "The task force that has been appointed to deal with this issue has a duration of two years, and we're about halfway through that. If either side tries to bring this up in this legislative session it's just going to get tossed at the task force. Especially since this is an election year, and no one wants to deal with this in an election year."
Task Force To Start Again In April
The task force, which was part of a compromise that allowed lawmakers to avoid imposing a tax on credit unions in the last legislative session, likely will start up again in April, he explained.
While this political battle has, as a matter of course, taken top priority at the league, Simpson said he realizes that there are other things a league is supposed to do for its member credit unions.
"It's true that a lot of resources have been shifted to the legislative battle, but we are looking to shift some of that money back towards other projects, too," he suggested. "Large credit unions have compliance staff and economies of scale. It's the small credit unions that need us for those kinds of services, so we are looking to facilitate liaisons among small and large credit unions. We want to foster that and facilitate the cooperative spirit that is already at work here in Utah."
And there has been at least one good thing to come out of the political battles: it's helped get the credit union message out as never before.
"Sure, this isn't the most desired path for raising awareness, but the legislative battle has done that," he offered. "A number of credit unions have reported exponential membership growth in the last year."
