Amendment to credit-union resolution may contradict rulings, its sponsor says

A new amendment to a controversial credit union resolution may contradict recent court rulings and broaden the reach of credit unions in Utah, the resolution's sponsor said Friday.

HJR1, "A Joint Resolution Related to Financial Institutions," received its first amendment Friday at the hands of Rep. Wayne Harper, R-West Jordan. Harper said his intent was to "hone the resolution on the true facts" and pare away statements and requests that are outside the purview of the U.S. Congress.

In essence, the amendment — approved Friday by a 40-35 vote of the Utah House of Representatives — strips the resolution of references to actions the Legislature took in 2003 to create a "non-exempt" class of credit union, as well as the resolution's original request that the U.S. Congress "take appropriate action, including examining whether there should be a restructuring of the National Credit Union Administration."

Instead, the amendment said, the Utah Legislature will ask that Congress examine the rulings of the NCUA to determine whether those rulings were consistent with the original intent of the law, and "whether the economic circumstances have changed since the enactment of the Federal Credit Union Act such that credit unions should have a broader role in the current financial marketplace."

The resolution's sponsor, Rep. Jeff Alexander, R-Provo, said Harper's amendment "changes the meaning (of the resolution) completely" and expressed specific concern about the amendment's final statement.

"It's interesting that the people who were very concerned about this legislation all along were afraid that we were attacking credit unions. But we were asking for direction from Congress," Alexander said. "Now what they've done is they've gone against the courts with this amendment, where they're saying we want to know if we can broaden the scope. The courts have said no. So I'm confused."

A preliminary look at the amendment's language leaves some question, according to Alexander, about whether credit unions can "broaden" their fields of membership even beyond the six counties that some now have. If that's the case, Alexander said, small credit unions could be hurt.

"We already have small credit unions feeling the challenge from the larger credit unions. If we open it up even more for the larger credit unions to expand further than six counties, we could see a lot of credit unions being taken over, or failing," he said.

Alexander, as well as bank and credit union advocates, said they'll spend the weekend trying to understand the amendment's effect and determine a course of action.