Utah An Example Other States Should Be Citing

The various state credit union leagues fighting off banker-inspired tax initiatives should all pay close attention to what happened in Utah and bring it to their own state capitals when the next credit union tax bill comes up.

For years, the state-chartered credit unions in Utah threatened to convert to federal charters if the bankers kept up their assaults on their field of membership rights, business lending powers, and their tax exemptions. But the threats, apparently, were not taken seriously.

So, when the attacks by the Utah bankers reached new levels this year, the three large credit unions targeted by the banks, America First CU, Mountain America CU, and Goldenwest CU, made good on their threats and ran for the exit of the state chartering system.

Now those threats may be appreciated in a different light.

The speed in which the three Utah credit unions fled the state system, taking with them millions of dollars in revenues (state sales taxes and supervisory fees), as well as the prestige of having the two largest credit unions in Utah state chartered, shocked everybody, the bankers, lawmakers and state regulators, alike. Why they were all shocked is a question in itself because the conversions to federal charter were not only legal, but practical. After all, what business would not seek out the most favorable environment.

Let this be a lesson to all of those parties who sought to make it so difficult for those credit unions to do business and grow to their own desires.

Lawmakers and the banking lobbies in all the other states where the credit union tax threat has emerged, including Iowa, New Mexico, California, and Oregon, should know that the possibility exists for their state credit unions to convert to federal charters if they are driven out of the state system.

Even though it's a shame the Utah credit unions had to finally leave the state system to gain peace, the example should be a powerful tool for the credit union lobby for years to come.

Look for more of this to happen over the next few years as the pendulum swings back to once again favor the federal charter.

By the way, such charter shopping is not unique to credit unions and has been done by banks, insurance companies and other entities for years.