Credit-union bill passes in House

A bill that will ease lending restrictions for state-chartered credit unions is on its way to becoming law after the Utah House of Representatives unanimously approved it Tuesday.

SB296 increases the amount a credit union can lend to individuals, from 1 percent of capital and surplus assets to 4 percent. The measure also allows the current $250,000 commercial loan cap to increase each year with the Consumer Price Index and lets customers apply for commercial loans immediately after joining a credit union instead of having to wait six months under current law.

The Senate approved the bill Thursday.

"I think there are a number of state-chartered credit unions that will see meaningful relief," Scott Simpson, president of the Utah League of Credit Unions, said.

The bill is the result of negotiations between the Utah League of Credit Unions and the Utah Bankers Association, which have long been at odds over the role of credit unions. Credit unions want fewer restrictions in order to operative competitively. Bankers worry credit unions such as Mountain America are so large that they operate like banks but benefit from nonprofit status. The two groups have battled for nearly 20 years in Utah.

During discussion in the House on Tuesday, co-sponsor Rep. Kevin Garn, R-Layton, said that the banks and credit unions have promised not to return to the Legislature for a change in law for at least five years.

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