The closed-door negotiations between Utah's banks and credit unions have broken down, apparently leaving their long-running turf war to be fought openly in the Legislature, right where a new poll indicates it should be decided -- and in favor of the credit unions.

"Unfortunately, there's no deal," Scott Earl, president of the Utah League of Credit Unions, told the Deseret News today. "We understand that a few legislators are looking at some bills that would deal with the issue, and we will still pursue our petition."That would be the citizen initiative petition, signed by some 102,000 credit union members, that asks the Legislature to return the law governing where credit unions may operate back to where it was before Nov. 4, when a 3rd District judge ruled that credit unions may not expand out of the single county in which they were originally chartered.

Representatives of the league and the Utah Bankers Association held their fifth closed meeting late Thursday as House and Senate leaders tried to broker a compromise over the issue.

"I was happy last night for about an hour and then the bubble was burst," said Howard Headlee, president of the Utah Bankers Association. "We should have known we were in trouble when (the league) brought three of the four largest credit unions to the table."

Despite the setback, Headlee said the UBA is confident that legislators will fashion "a credit union membership law that will protect both community bank customers and credit union members for years to come."

A total of five meetings were held between the two combatants and with House Majority Leader Kevin Garn, R-Layton, who sits on the board of a small Utah bank, and Sen. Dave Steele, R-West Point, who sits on a credit union board (Davis County Schools Credit Union), unsuccessfully trying to negotiate a compromise.

Headlee said that, ironically, Steele was the only credit union member at the table Thursday who represented a small credit union. He said Steele offered a compromise but that the two largest credit unions "torpedoed" the deal.

Earl said there were "a couple of major sticking points" that prevented a deal from being worked out. The main one, he said, was the unwillingness of the banks to allow those credit unions already operating in more than one county to solicit new customers.

Only six of Utah's 41 state-chartered credit unions have branched out into multiple counties, and the league wanted to "grandfather" them because they have invested in "brick and mortar," that is, physical facilities.

America First Credit Union now operates in seven counties; Mountain America in 11; Beehive in three; Utah Central in two; McKay-Dee Hospital in two and Golden West in two.

"We didn't ask to grandfather all 41, just those six that, in good faith, had made investments in those counties," Earl said.

But the banks wouldn't go for it. They were willing to allow those branches to remain open but not grow any larger, a caveat the credit unions found unacceptable.

Also, the credit unions wanted the ability to move into those Utah counties that have very low populations, citing their need for financial services. "But (the bankers) nixed that one too," Earl said.

Meanwhile, the Utah League of Credit Unions held a press conference at 10 a.m. today to release the results of a survey conducted this month by Dan Jones & Associates that indicates a majority of Utahns support the credit unions over the banks, even though most of those surveyed said they use banks as their primary financial institution.

"Whether they use a bank, a credit union or both, Utahns strongly believe that credit unions should have the ability to serve members in multiple counties," Earl said.

The poll indicated that eight of 10 voters want the Legislature to address the issue rather than let the court ruling stand, and 68 percent said the Legislature should pass the citizen petition, labeled the Credit Union Access Act, and allow credit unions to operate where they choose, as they have since 1983.

The survey also indicated that 77 percent don't believe credit unions should be taxed, regardless of their size, as long as they remain nonprofit, and there should be no difference in how credit unions are treated based on their size. Seventy percent said the Legislature should not impose new taxes on credit unions.

The taxation issue has been particularly vexing to the bankers but it was not on the table during the past two weeks of negotiations. Only the "geography" issue was considered.

Half of those polled said they "strongly agree" with the statement that ". . . banks are making record profits and already get too many special interest breaks. They should leave credit unions alone."

The advertising campaign the bankers mounted against the credit unions in recent weeks has apparently not done its job, according to the survey. More of those surveyed said the ads and commercials made them less supportive of the bankers position than those who said the spots brought them over to the bankers' side.

But the UBA said it has its own Dan Jones poll that favors the banks.

"Our poll says 85 percent believe that if the large credit unions retain profits from their members, just like a bank, they should pay taxes on those profits," Headlee said.