Nearly 18 months into its two-year mandate, the Utah Legislature's Financial Institutions Task Force is still trying to define itself.

"I think the comment about mission is helpful. I'm concerned about the mission of the task force," Rep. LaVar Christensen, R-Draper, said at the committee's meeting Thursday.

The task force, created with the passage of HB162 during the 2003 Legislature, was designed to study issues relating to and affecting financial institutions, including the feasibility of taxing credit unions.

Taxation, or removal of credit unions' tax exemption, was the topic of bitter debate during the 2003 session. Banks argued that credit unions had an unfair advantage because they "act like banks, without being taxed like banks." Credit unions defended themselves against what they saw as an unfair attack by bankers, and HB162 went through more than a dozen revisions before it was passed.

When HB162 became law, several credit unions — including the state's three largest — fled to the industry's federal charter instead of remaining under the state's purview, citing hostile relations between state regulators and lawmakers.

With the "big three" credit unions under the federal regulatory umbrella, the task force foundered. It met a few times in 2003, and then not again until June. Since then, discussion topics have been as diverse as an explanation of the history of commercial credit (going all the way back to Hammurabi and Babylon) back around to the heated battles about tax exemptions and credit union expansion and "level playing fields."

Rep. Howard Stephenson, R-Draper, said Thursday that the state's current credit union charter — which exempts credit unions from paying state business income taxes — amounts to "implicit government policy" favoring credit unions over banks.

"If commercial banking is going to be allowed to expand and to be a huge thing at credit unions, then we have by doing that stated that we also have an implicit policy —the government recommendation to wise consumers and wise commercial folks who need these loans, that you ought to do this with credit unions, because we have instituted this differential in pricing because of our tax policy," Stephenson said.

Christensen added credit unions' lending restrictions and growth issues to the list, urging a thoughtful discussion of the "fundamental issues."

Sen. Michael Waddoups, R-Taylorsville, expressed concern about the competition between the Utah and federal credit union charters and questioned whether state-chartered credit unions are at a disadvantage.

Rep. Wayne Harper, R-West Jordan, said lawmakers should resist the urge to "tinker" with laws and voiced opposition to the competitive equity fee.

The task force adjourned Thursday without taking any action.


E-mail: jnii@desnews.com