Controversy circles banks, credit union

House Joint Resolution 1 will have no immediate effect on policy in Utah, and even some of its fiercest challengers claim it will be largely ignored by its intended recipient, the U.S. Congress.

Yet the proposed resolution, sponsored by Utah House Majority Leader Jeff Alexander, R-Provo, has already spawned conspiracy theories, and it is expected to spark one of the most rancorous battles during the 2005 Legislature.

"We hate it. Hate it," said Scott Simpson, president of the Utah League of Credit Unions. "We'll do everything we can to let our membership know what it is and urge them to contact their legislator."

HJR1 was the product of the state's Financial Institutions Task Force, which in turn was created during the 2003 Legislature. The resolution seeks to reaffirm actions taken during the 2003 session — including the establishment of a "nonexempt" class of credit union — and asks the U.S. Congress to:

• Examine and "take appropriate action" regarding the regulation of credit unions.

• Provide another tax structure for financial institutions, which allows states to determine which state and local taxes apply to such institutions within their borders.

• Provide a "reasoned" explanation if Congress decides to keep the current tax structure in place.

The intent of the resolution, according to Alexander, is to get direction and feedback from Congress.

"The intent is to have Congress look at the NCUA (National Credit Union Administration) and some of the actions that they've taken in the last few years and tell us if they agree with it," Alexander said. "We're just looking for some direction on how they view credit unions. We'd like them to notice how this has affected our state (credit union) charter."

Alexander said the need for direction was underscored by a U.S. District Court ruling last month, which sent several NCUA decisions — expanding fields of membership for several federally chartered credit unions in Utah — back to the administration for reconsideration.

"Especially after the ruling, we're not sure exactly in which direction we should be looking," Alexander said.

But Simpson questioned whether there aren't other, nastier forces at work behind HJR1.