Now that credit unions are facing a new set of laws, they'll have to make critical decisions about their future in Utah.
Credit unions emerged weary and scathed from the 2003 legislative session, after fending off what they called another attack by banks. It was a session that began with a proposal to impose taxes, fees and other limitations on the state's largest credit unions. It ended with a compromise that included limitations on business lending by a few credit unions and the formation of a two-year task force to study the issues in depth.
On Wednesday, the two credit unions most heavily impacted by the bill, Mountain America and America First, said only time will tell whether HB162 helps anyone. It may lead to better laws and less animosity between banks and credit unions; or, it could send waves of credit unions screaming from the grasp of state regulation to the federal charter.
"We're pleased that no new taxes are contained in the bill," said Brent Allen, executive vice president of America First. "We're comfortable with the two-year study period. We think a lot of things will come from that. We're not comfortable with the prohibition on commercial lending. It will mean a drop in our service level for our members.
"But all in all, it's a lot better than it might have been — just not as good as it could have been."
Fred Nydegger, senior vice president of Mountain America, saw the situation more grimly.
"In our estimation, (HB162) certainly isn't any victory," Nydegger said. "We think that the citizens of the state deserve better. We just shouldn't have been there. We shouldn't have taken up the legislators' time. It doesn't benefit anybody. Nobody here won anything."
Mountain America will "continue doing what's in the best interest of our members," which Nydegger said will mean doing what many lawmakers feared: switching from the state credit union charter, which brings sales tax revenues to the state, to a federal charter.
The federal charter is no panacea, Nydegger admits. Mountain America will have to adjust certain aspects of its membership requirements in order to comply. But the regulatory environment is much "friendlier" on the federal level, he said, and that's worth the effort.
"This isn't just a 'big credit union' battle," Nydegger said. "This is an industry fighting for its survival. We're moving because the environment here is hostile, and we have to continue the growth and development of our members, products and services to carry on."
Mountain America isn't the only one considering the switch. Brooke Moea'i, senior vice president of the Utah League of Credit Unions, confirmed that credit unions statewide are now seriously considering moving to the federal charter — a move the league isn't discouraging.
"We believe strongly in the dual charter system," Moea'i said. "If it will help the state recognize that there is a charter gap, then maybe that's good. But regardless, we'd hope the credit unions will do whatever is best for their members."
But for now, credit unions maintain a cautious optimism, hoping that the task force will take a thoughtful, objective look at the complex issues before them.
"The task force is just the beginning," Moea'i said. "We're hoping they select people who will be open-minded — people who really want to understand the issues, who will see the value of credit unions being chartered in Utah."