The banks vs. the credit unions turf war is over, and I already miss it.
No, it wasn't as big as Bill and Monica or the SLOC bribery scandal. It didn't have the pathos of who murdered Jon-Benet or O.J.'s valiant search for the "real killers."But for the normally staid Utah business community, the banking brouhaha was pretty juicy stuff.
The long-running battle between the two financial services industries roared into the Utah Legislature in January like a lion, raging with rhetoric, a citizens petition, rallies, dueling polls, TV and newspaper ad campaigns . . . it was great theater.
At issue: Whether credit unions should be able to expand at their pleasure throughout the state. A state court, responding to a bankers' lawsuit, had said "no" in November, and the credit unions were asking lawmakers to say "yes" in February. Simmering just below the surface was the bankers' pet peeve: Why don't credit unions have to pay taxes on their retained earnings?
Unfair, the banks charged. It makes it tough for mom 'n' pop "community banks" to compete, even though the big banks in the state routinely report record quarterly profits.
Closed-door bargaining sessions between the warring parties, with legislators acting as referees, seemed ready to produce a breakthrough in late January. But no! At the last minute, the talks broke down as both sides accused the other of bargaining in bad faith.
"These people really don't like each other," a spectator murmured during a hearing before the Senate Business Labor and Economic Development Standing Committee. "It's like a Utah vs. BYU football game."
It seemed inevitable that the issue would be decided on the floors of the Utah House and Senate, amidst passionate speeches, the mother of all lobbying campaigns and even more rallies and "sit-ins" by partisans of the two sides.
But then, at a Feb. 2 standing committee meeting, peace broke out. The two main combatants, Howard Headlee, president of the Utah Bankers Association and Scott Earl, president of the Utah League of Credit Unions, told senators they might yet be able to cut a deal.
They did, and SB237, sponsored by Sen. Al Mansell, R-Sandy, a long and technical piece of legislation that gives neither side a clear-cut victory, breezed through the Legislature with no debate and even less rancor. It now awaits the governor's signature.
It was an anticlimax on a par with Geraldo's live television opening of Al Capone's safe -- the one that contained a couple of empty soda pop bottles.
Mansell's bill somewhat restricts the expansion of credit unions on a geographic basis and caps their business loans at $250,000. But no current credit union branches will close, and most Utahns will be able to join a credit union in the future, even though it might not be the one they originally wanted.
The UBA's Headley says he's pleased with the outcome and is "strongly encouraged" by the Legislature's position that the credit unions' tax exemption should not be used to involve them in serious commercial lending.
"We're very pleased that this dispute has been resolved, and we're strongly encouraged that credit unions will go forward as we suggested, serving people united by a common bond . . . Given where we've been for the last 15 years, this is a dramatic improvement."
The Credit Union League's Earl says he is mostly pleased with the compromise bill but has concerns with its limiting the ability of credit unions to reach into underserved areas of rural Utah.
He says he has "commitments" from some legislators that the issue will be looked at in future sessions.
As for the tax exemption for credit unions, Earl believes that was reaffirmed and that the only way it could be tampered with is if Congress were to remove it for federally chartered credit unions, an unlikely prospect anytime soon given that it strongly supported the exemption last year.
"But the tax question was reaffirmed and, from our perspective, that issue has been put to bed. The Senate was very firm in leaving our tax exemption in place."
E-mail (max@desnews.com) or fax 801-236-7605. Max Knudson's column runs each Monday.