Utah's credit unions lost a lengthy court battle with the state's banks earlier this month, but they hope to win the war by going to the Utah Legislature.
Credit union members who visit their branch offices this week are being greeted by employees asking them to sign a petition to bring the issue before the next session of the Legislature, which convenes in January. More than 35,000 signatures are needed by December 10 to make that happen.Lisa Howell, spokeswoman for the Utah League of Credit Unions, said Wednesday it was too soon to say whether they'll reach that goal by the deadline because many of the credit unions didn't get the petition forms until Monday, but she says the League is "cautiously optimistic."
"The response has been positive. People in Carbon saw our ad (which ran in Salt Lake newspapers Sunday and Monday asking members to sign the petition to "fix the law"), and they were lined up Monday morning outside their credit union to sign the petition."
She said other small credit unions, which the League didn't think would participate in the action, have been calling the League office asking for the forms.
What are the League's chances in the Legislature? Howell puts it this way: "We believe the legislators' constituents are with us and we believe the legislators are with their constituents."
Scott Earl, League president, said that the court ruling "isn't good for Utah families" and will impact their ability to choose a credit union as their financial services provider.
On Nov. 5, 3rd District Judge William A. Thorne ended a five-year court case in favor of the banks by ruling that state-chartered credit unions must operate only in a single county. The ruling stemmed from a lawsuit brought by the Utah Bankers Association in 1993, contesting the right of credit unions to operate outside of the county in which they are based.
The court agreed, saying the multicounty credit unions are acting more like mutual banks than credit unions and may not seek and enroll members who live outside their county.
The controversy stems from a 1982 interpretation of a state statute by the Utah Department of Financial Institutions to the effect that a credit union which defines its field of membership by geographic area (as opposed to, for example, by employees of a company or organization) could serve members in multiple counties.
It didn't seem like a big deal, at first; but as membership and assets of certain credit unions began to grow exponentially, the bankers took notice. The idea of financial institutions "stealing" their business, while not being subject to the same regulation and, even worse, being exempt from taxes, was too much to take. In 1993, they filed suit over the field of membership issue and five years later they won.
If the issue now makes it into the Legislature, look for a massive lobbying campaign by both sides and a lot of fiery rhetoric.