After a weeklong scuffle on Capitol Hill between the Utah Bankers Association and the Utah League of Credit Unions, the credit unions say they may present the public with a ballot initiative that could cap interest rates on all loans.

Scott Simpson, president of the Utah League of Credit Unions, said the credit unions haven't decided on an interest rate for the initiative, which the credit unions say they will pursue if credit-union law isn't changed during this legislative session.

Credit unions chartered by the federal government operate with an 18 percent cap. "Credit unions are comfortable living in an 18 percent environment," Simpson said.

If the public approved such a cap, the state's payday-lending companies could be put out of business, because their rates are much higher.

Many payday lenders charge $15 for every $100 borrowed, said Laura Polacheck, associate state director of Utah chapter of the AARP, a senior-citizens lobby group that wants lawmakers to cap payday lenders' interest rates.

The Deseret Morning News contacted payday lenders through the Utah Consumer Lending Association on Friday but could not reach anyone who would comment.

The bankers association's president Howard Headlee said he hasn't seen the credit unions' proposal.

"It's a tricky subject, that if it's not done correctly, could have a very detrimental impact on availability of credit in the state," he said.

Although bankers do not offer high-interest payday loans, other bank products such as loans against checking-account balances can charge up to 3,650 percent APR. Banks argue that such products are short-term and the interest rates are actually bank fees.

Credit unions want three aspects of the law changed for state-chartered credit unions. They want to increase business lending above the current $250,000 cap, to decrease from six months to immediately the time businesses must wait after joining a credit union to get a loan, and to increase from the current 1 percent to roughly 10 percent the proportion of assets that credit unions can lend in a single loan.

E-mail: [email protected]