OK is near for credit-union bill

By Laura Hancock
Deseret Morning News
Published: Thursday, Feb. 28, 2008 12:08 a.m. MST
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A bill that would provide state-chartered credit unions some relief in lending rules is expected to pass the Utah Senate today.

A technicality kept the newly substituted SB296 from passing out of the Senate on Wednesday. If the bill passes out of the Senate, it advances to the House.

The bill is the result of negotiations between the Utah League of Credit Unions, which wanted state-chartered credit union rules loosened, and the Utah Bankers Association, which wanted state law to remain intact. Sen. Curtis Bramble, R-Provo, and Sen. Gene Davis, D-Salt Lake City, are sponsoring the bill.

The bill increases the amount a credit union may offer in a personal loan from 1 percent to 4 percent of "capital and surplus," defined as members' savings and earned income.

The bill will allow new members to immediately qualify for business loans. Current law requires new members to wait six months.

And the bill allows the cap on business loans to increase each year with inflation, pegged to the Consumer Price Index. The current law caps business loans at $250,000 and does not allow inflation increases.

Although SB296 did not pass out of the Senate, senators did approve a change to the bill that prohibits certain credit unions from benefiting under the proposed provisions.

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The change was proposed by Bramble, who said the bankers and credit unions agreed to it.

The change prohibits certain credit unions from benefiting from the new provisions of SB296. Specifically, America First, Golden West and Mountain America credit unions were prohibited.

Utah Bankers Association President Howard Headlee thinks the three credit unions are so large they function as banks, even though they have tax-exempt status.

Scott Simpson, president of the Utah League of Credit Unions, says that the relief of SB296 isn't enough to lure the three credit unions back to state charters.

E-mail: lhancock@desnews.com

3 comments

Recent comments

It appears that the legislature is still in the pocket of the banking...

Gordon Dames | Feb. 29, 2008 at 12:53 p.m.

Since when did the state legislature put the names of specific companies...

David Kwant | Feb. 29, 2008 at 10:56 a.m.

The paranoia of Howeerd Headlee and the UBA is amazing. They make...

Ned | Feb. 29, 2008 at 8:49 a.m.