A CU Journal Series On Conversions
The Credit Union Journal has been running an ongoing series examining charter conversions. Below are excerpts and observations shared as part of that series:
* "There probably are some that had [a conversion to a stock-issuing bank] in mind all along, but that doesn't necessarily mean that [the board members] were putting their own interests before that of the institution or the members'. I tell people that if they are thinking about converting in order to gain wealth, then that's a breach of your fiduciary duty. It's disturbing, this marketing of the greed factor.
Richard Garabedian, an attorney and consultant on conversions with Jenkens & Gilchrist's Washington
* "It's like an insurance policy, so that if the legislative or regulatory environment were to become such that a credit union couldn't continue to serve its members, they could convert to a different institution. It's like an escape hatch in case of some future crisis. The current situation is very far from that, and it's almost impossible in today's environment to dream up a scenario where members are better served by changing charters."
CUNA Economist Bill Hampel
* "Unfortunately, we usually don't get complaints until after the vote and after the conversion. Members-or I should say former members-come to us and say, 'I had no idea my credit union would ultimately become a stock institution. I thought we would just have a different form of mutual institution.' And of course, by that time, the credit union is long since gone from our jurisdiction."
NCUA Chairman Dennis Dollar
"One of the responsibilities a credit union league has is to do things that will help to continue the credit union movement. It used to be one of their primary jobs was to start new credit unions. Today, I believe it is the responsibility of the leagues to take a leading role in opposing bank conversions.
Wayne Langei, CEO of Whatcom
Educational CU, Bellingham, Wash.
"You know, I've heard people talk about what bad people the boards and management of [former CUs that become stock institutions] are, and how these 'insiders' make out like bandits at the expense of their members, so I know they must be saying what a bad guy I am. But what they never mention is that every single member had the same right to buy stock in the bank. They had the first option to buy in. Some did, some chose not to. We have happy stockholders, and we have happy customers who think of themselves as members. We haven't had to change our rates or our fee structure because of taxation... You don't have to change what you are because you change your name."
Herb Moltzan CEO of BUCS Federal Bank, formerly BUCS FCU