Utah Bankers Say They Will Bring Fight To Congress
The Utah bankers, still licking their wounds from the escape of the three largest state credit unions from their tax trap, are chasing their prey all the way to Washington.
Representatives from 20 of the state's largest banks, including Zions Bancorporation, the state's biggest bank, and national powers Wells Fargo, Bank One and KeyCorp, traveled to Capitol Hill last week to lobby Congress regarding what is happening in their view in Utah, the delineation of the large diversified credit unions from the "traditional" mom-and-pop institutions.
Other banks joining the lobby included Capital Community Bank, Bank of American Fork, State Bank of Southern Utah, and Jefferson Bank.
"A line needs to be drawn when a credit union is no longer a credit union and therefore, shouldn't qualify for the tax exemption," said Howard Headlee, president of the Utah Bankers Association, of ongoing efforts in Utah and several other states to separate the large from the small credit unions.
In lobbying Congress the Utah bankers were trying to tighten the noose around the three large Utah credit unions, America First CU, Mountain America CU and Goldenwest CU, which narrowly escaped the Utah tax bid by opting to convert to federal charters. Legislation to tax the three credit unions was defeated earlier this year in the Utah legislature in favor of a bill to study future taxation. But that bill severely curtailed the lending of those three credit unions, the only state charters in Utah to maintain operations in multiple counties.
The credit unions' move to the federal charter is what drew the bankers to Washington, where they met last week with representatives from the Treasury Department, the Federal Reserve, and the state's five-member congressional delegation, including powerful, five-term Sen. Orrin Hatch, chairman of the Senate's Judiciary Committee.
"The ball has finally rolled into the ultimate court," said Headlee, of their efforts to draw Congress into their decades-long credit union wars. "It's their problem now and they need to do something as soon as possible."
The bankers new lobbying efforts were fueled by NCUA's action the week before awarding the largest community charter ever granted a federal credit union to Tooele FCU, encompassing as many as 1.6-million residents in six Utah counties surrounding Salt Lake City.
"NCUA has clearly violated its own rules and gone beyond the intent of the law," said Headlee. "This is a forerunner of what will happen with Mountain America and America First," he added, referring to the pending charter applications for the two Utah credit union giants, which have $1.2 billion and $2.5 billion in assets, respectively.
CUNA lobbyist Gary Kohn said the trade group has been expecting the Utah bankers to bring their case to Washington.
"This is just part of an ongoing effort by the bankers. It's really nothing new," he said. "I don't view it as a serious threat. Of course, it's something that we have to be paying attention to over the long run. But it's not a big surprise."
The Washington lobbying effort comes as the Utah tax fight is about to heat up again with the legislative task force on credit unions scheduled to hold its first public hearing May 8. But the panel, which was empowered to study the potential impact of a tax on the three large credit unions, is now faced with a big dilemma as those credit unions will no longer come under the state's authority once they qualify for federal charters. So the issue of whether to tax them is moot.