Many of this state's 2.5 million residents have grown weary of the constant feuding between credit unions and banks, a grudge match that has endured for a decade or more, permeating the state's media over the past year.
But for one man, the scion of the state's leading banking family and the primary credit union antagonist, last week's vote by the House to pass a credit union tax bill puts him on the verge of a decade-long quest.
"This bill, here in Utah, what it intends to do is say 'banks welcome competition, so long as it's on the same terms as those with whom we compete,'" said Harris Simmons, the 47-year-old president and CEO of Zions Bancorporation, who personally traveled to the capitol last week to lobby lawmakers to pass the credit union tax. "Credit unions will still maintain the right to remain as a credit union, but will be required to compete on the same economic terms as banks.
To Simmons, whose father bought the state's largest bank from the Mormon Church, the competition with credit unions has become something of a crusade.
Banks all over the country are worried about competing with credit unions as the tax-exempt institutions expand into new communities and grow their product lines, according to Simmons, a long-time member of the American Bankers Association's Credit Union Task Force and its former chairman. "They're losing entire lines of business to credit unions," he said. "Ask them, 'When was the last time they made a car loan?' "
Not Opposed To All Credit Unions
Simmons, whose $28-billion bank earned a fair 1% return-on-average assets (ROA) last year-below the credit union industry's 1.1%-insists his antagonism is not based on opposition to all credit unions. "It's not a matter of antipathy, at all," he said, explaining that his ire is targeted towards a few large credit unions that have expanded into areas that were once considered the Zions' preserve. "It's a matter of understanding that over longer periods of time you can't have a competitive, unfair situation in the marketplace."
"As (credit unions) get a foothold, they are like the kudzu of our industry. They take hold of a product line and they decimate it," Simmons said. "The question isn't, 'how much money we're making,' the question is, 'How much money are credit unions making that isn't taxed?' "
The latest round of legislative warfare, according to Simmons, was prompted last year when the state's largest credit unions, America First CU and Mountain America CU, organized subsidiary CUSOs through which they planned to conduct business lending that they maintained was unregulated under the umbrella of the state's credit union rules. For Simmons, whose bank is one of the 10 largest small business lenders in the country, this was an affront. "These aren't the rank and file credit unions. These are the largest ones that have this insatiable appetite for expansion," he insisted. "It's not just geographics. It's product line and everything else outside of the box."
"This is about some large regional institutions that have nothing to do with the original concept of a credit union. They're mutually owned and that's it. But there are other mutually owned institutions that pay taxes," asserted Simmons.
And that is the gist of this new credit union tax bill, which was crafted by the Utah Bankers Association, headed by Scott Anderson, chief of Zions' Bank, and Zions' legislative allies.
"It's a bill which is really trying to distinguish between two very different kinds of institutions," explained Simmons. "Those which most of the United States would consider traditional credit unions, formed around the common bond, etc., and those which have really become, for all intents and purposes, full-fledged mutual banks, that serve all segments of the population in Utah."
"This is happening at a time when states, certainly the state of Utah, and other states as well, are strapped for funds. What we're saying is, 'Before you raise taxes on those who pay them, you ought to close loopholes on those who don't.'"
Five Vs. Three
An avid sports fan, Simmons likens the competition with credit unions to a basketball game in which one team, the banks, is required to compete with just three players, while the other, credit unions, is allowed five. "Who wants to go to a basketball game when one side has only three players on its side?" he asked, explaining that 40% of his income, the equivalent of two of a team's five players, is paid out in either state or federal taxes, which credit unions are not subjected to.
Now, with Utah facing a fiscal deficit of as much as $200 million this year, is the time to press the case for credit union taxation, suggests Simmons. "We have the largest household size of any state in the nation, yet we're last in per- pupil funding. At the same time, we're in the top three in bankruptcy filings. What we've effectively been doing in Utah is subsidizing consumer spending at the expense of public education."
"This isn't just about making money. This is about survival," insisted Simmons. "It's about remaining independent; being able to grow in a healthy way,"