DIS-MEMBER-INC CREDIT UNIONS.

• Author: Holt, Valerie
• Position: Brief Article

STATE-CHARTERED CRETIT UNIONS have been a part of Utah's financial landscape since the early 1930s. They were initially established to, among other things offer credit to individuals who because of the limitations of the banks, were unable to receive credit.

In 1983, the director of financial institutions for the state of Utah reinterpreted the language of the original more limited charter for local credit unions, allowing them to enroll members in all 29 counties of the state, even if the members were not part of the select employment group (SEG) of the union, according to Scott Earl, president of the Utah League of Credit Unions.

In 1994, banks sued credit unions for overstepping the boundaries of the charter. The banks' rationale was that the 1983 interpretation gave credit unions an unfair advantage and they had streched their limits using profits for expansion, not for member loans. Credit unions are nonprofit organizations, and thus are not taxed because profits are returned to members or account holders.

Howard Headlee president of the Utah Banker's Association says. If credit unions want to operate on a more expansive level closer to a cooperative bank, then they should be taxed accordingly. The case concluded in 1998 in the banks' favor and the Utah legislature followed up with Senate Bill 237 in 1999.

The terms of SB237 called upon credit unions to return to a structure much closer to their original charter, limiting them to a certain field to membership, such as employees of one company regardless of where they live in the state. In addition, they are limited to open membership in a single, 'domicile county'. In every other county where credit unions operate, they can only offer membership within their SEG," explains Lisa Howell, director of communications for the Utah League of Credit Unions.

Irene Himmelberger, president of Beehive Credit Union, says, "SB237 took choices away from the people of Utah, reducing their ability to shop around. Utahns should have a right to choose not only between a...