SALT LAKE CITY (3/6/08)--A bill that would result in some legislative changes to ease restrictions on Utah's state-chartered credit unions unanimously passed the state House Tuesday, and now heads to the governor’s desk for approval to become law. The bill passed in the State Senate last week. “I think it is gratifying that several members of leadership stood up and helped move back some of the more punitive measures that credit unions have been subject to for several years,” Scott Simpson, president of the Utah League of Credit Unions, told News Now
. Senate Bill 296, sponsored by State Sen. Curt Bramble (R-Provo), would create several changes to the state charter. It would:
* Increase the amount a credit union can loan to its members to 4% of assets from the current 1%; * Eliminate a requirement that borrowers must be members of a credit union for six months before receiving a business loan, and make them eligible immediately after joining; and * Maintain the current $250,000 cap on business loans, but allow the cap to increase with inflation--pegged to the Consumer Price Index--beginning May 5 with an increase each year on Jan. 1 (Deseret Morning News Feb. 22).
Although only a “handful of state-chartered credit unions do business lending” at present, this bill is very important to them, Simpson said. “No one is going to want to take out a business loan at a state-chartered credit union if they have to go through a six-month waiting period,” he added. Originally, credit unions wanted the business loan cap to be raised to 10% of a credit union's capital and surplus, and the $250,000 business lending cap to be lifted to 12.25% of a credit union's loan portfolio--similar to the cap for federally chartered credit unions. The league and the Utah Bankers Association (UBA) have promised Bramble and leaders of both houses of the state legislature not to return to the legislature seeking changes to the law for five years, the newspaper said. While not supporting the change for credit unions in the bill, the UBA pledged not to oppose the bill, as part of the compromise solution, Howard Headlee, UBA president, told the paper.