When the Utah Bankers Association held its first convention 80 years ago, those in attendance probably thought they had problems, and most likely they did.
But those turn-of-the-century bankers could not have anticipated the difficulties their heirs would have to cope with eight decades later as upstart competitors - banks in everything but name - would begin threatening their basic business.That's the number one issue the 400 representatives of Utah's 41 banks will grapple with here this week at the UBA's 80th annual convention, which got under way Monday morning.
It's not a new battle, this fight to stay competitive in the rapidly changing financial services industry, but it gains intensity with every year that bankers find themselves hobbled with regulatory fetters put on in the '30s while other "non-bank banks" move freely in the fast lane of the '80s.
The bankers' fight for parity is being waged on two fronts: Congress and the Utah Legislature. According to UBA executive vice president Lawrence W. Alder, the next year or so may finally see some progress.
Last year the UBA took a bill to the Legislature that would have given the state Commissioner of Financial Institutions, through rules and regulations, authority to grant state-chartered banks the right to market insurance and securities and engage in some limited real estate activities. It passed the Senate but died in the House of Representatives.
Alder believes the bill was too vague and that legislators thought it gave too much regulatory authority to the commissioner. This year, he said, a new bill - sent two weeks ago to the joint House/Senate Business, Labor Interim Study Committee - will specifically address securities, insurance and real estate powers for banks.
"These non-bank banks have the best of both worlds," said Alder. "We've (banks) got to protect our base and the only way we can do that is to be given the opportunity to compete."
Alder notes that retailing giant Sears is a formidable financial services competitor with its Dean Witter securities arm and its Coldwell Banker real estate subsidiary, both fields of which banks are precluded from entering. And he notes that K Mart is gradually expanding the stores in which it offers financial services.
"But bankers don't want to sell socks or wrenches," said Alder, "we just want to provide a broad range of financial services. And I might add, that's what the consumer wants. Studies show they want to one-stop shop for financial services."
Most people don't realize it, said Alder, but the recent entry into Utah of the United States Army Automobile Insurance Association (USAA), a $12 billion insurance fund, intends to offer savings and checking accounts, certificates of deposit, IRAs, and consumer and mortgage loans - powerful competition for local banks.
Then there are the credit unions, which Alder believes aren't paying their fair share in taxes. "We don't fault the credit unions, but shouldn't they be paying taxes if they're going to compete with tax-paying entities?"
Then there is the auto loan business, once a mainstay for banks. That business, said Alder, has now been largely pre-empted by the auto manufacturers themselves, who are able to offer cut-rate financing as an incentive to buy their cars.
On the national level, attempts to liberalize federal banking laws has been stalemated, but Alder says a number of states are taking Utah's approach, "and it may be enough to get Congress off dead center." Thirty-four of Utah's banks are state chartered and seven federally chartered.
"Many states are taking the route we're taking in getting state legislatures to authorize new products for banks and we hope it will force Congress to act," said Alder.
Why is something that seems so obvious so difficult to get passed? "Protection of turf," said Alder. "We're dealing with powerful lobbies. (Utah Sen.) Jake Garn says there are more insurance agents in New Jersey alone than banks in the whole country."
Speakers scheduled to address the convention this week include Gov. Norm Bangerter, Commissioner of Financial Institutions George Sutton, American Bankers Association President Charles H. Pistor, University of Utah President Dr. Chase Peterson, bank consultants Arthur Pulis and Alex Huck, and University of Colorado professor of marketing Philip White.