As the debate over the question of charter conversion continues to escalate, I am hopeful that it is addressed at a higher level than some of the recent articles published in the credit union press seem to indicate.
I have read with disappointment stories which contained personal attacks against Dick Ensweiler, president and CEO the Texas Credit Union League and chairman of the Credit Union National Association, charging that Mr. Ensweiler has not done enough to thwart the efforts of credit unions planning conversions to bank charters, including one or more that are located in Ensweiler's home state of Texas.
I've known and worked with Dick Ensweiler for more than 30 years and know of no one who is more devoted to or passionate about the successful development of credit unions, the system that supports those efforts, and most importantly, the well being of their members.
So I called Mr. Ensweiler (an action his detractors failed to take the time to do before publicly chastising him), and asked him exactly what he had personally done with respect to the issue of credit union conversions, particularly those credit unions undertaking such activities in his own state. This is what I've learned.
* With regards to Mr. Ensweiler's personal perspective, he has been extremely clear on the issue of conversions. In fact, as early as 2003 during a debate before a large credit union audience, with a CEO of a California thrift that had recently converted from a credit union charter, he stated then, as he does now, that conversion was wrong, and that members' reserves should not flow to a few.
* In December of 2004 when the CEO and chairman of the board of Community Credit Union (Plano, Texas) visited TCUL offices to announce the decision to convert, his response to them was that he understood their authority to do so, but he would strongly prefer that they work with him to find ways to meet their members' needs within the credit union charter.
* When Mr. Ensweiler was informed early in January of this year, by the President of OmniAmerican Credit Union (Fort Worth, Texas) of a decision to convert, his response was similar. He then requested that the TCUL chairman to name a Blue Ribbon Task Force to make a recommendation to the League Board to determine TCUL's policy with regard to the issue of conversion.
? In March the Texas Shared Services Corporation adopted a policy not to allow credit unions converting to bank charters to remain within the shared branching network.
* In April TCUL launched a new website to help members clearly understand what a conversion would mean to them and began contacting DFW-area news media in an effort to educate the public about the impact of conversion. In fact, Mr. Ensweiler was also quoted in the Dallas Business Journal about the league's concerns regarding the lack of clear disclosure efforts to help members understand what they are voting on.
* At the same time TCUL requested that the Texas Credit Union Department adopt stronger requirements for credit union conversions that, at a minimum, are in parity with NCUA's disclosure language. The DFW CU Awareness Council has been asked by the TCUL to begin a cooperative effort to help get the message out about the differences between being a credit union member/owner and a bank customer.
* Mr. Ensweiler also told the "Coalition for CU Charter Options" (a group of former CU CEOs turned bank CEOs) to "stop using bully tactics toward anti- conversion advocates" in response to a threatening letter the so called coalition sent to one CU CEO who offered to financially support the anti-conversion efforts.
* Also in April, Mr. Ensweiler attended the Community CU annual meeting where, as a member, he publicly questioned the credit union board and management about the lack of clarity with regard to promised clear and open disclosures to the membership. He stated that the conversion package provided members, fails to disclose the fact that it is a conversion to a bank that the members are being asked to approve. He also provided access to TCUL's PR consultant to a group of credit union members organizing an effort to educate members where credit unions propose conversions.
* On May 5 Mr. Ensweiler was interviewed by the Dallas Morning News about the lack of disclosure in area conversions and the league's concern that members really may not know on what they are voting.
* And finally, at the recent National Credit Union Roundtable meeting, he proposed for discussion that legislation be sought which would require any mutual financial institution to pay out to depositors all reserves and undivided earnings, which is what insurance companies must do when converting from mutual to stock ownership.
Now, as a former manager of a state trade association, it seems to me that Mr. Enweiler's activities and actions to date are at the very least consistent with the leadership responsibilities he is charged with, both as the CEO of TCUL and as the elected chairman of CUNA. I would also suggest that those who feel that he should do more might want to contact Mr. Ensweiler and offer additional suggestions and appropriate courses of action, especially since some who are throwing out insults have themselves been absent of leadership on this issue. It also seems to me that an effort to help would be a far more effective way to proceed than to level personal attacks at members of our own family (a divide and defeat tactic that the bankers thoroughly enjoy promoting).
As for my personal feelings, I'll repeat what I've suggested previously. The most compelling argument against conversion can be summed up by requiring those who wish to pursue such an action to explain to the members how giving up of their equity and democratic control of their credit union will benefit each and every owner/member. As a credit union member I'd like to know how much more I'll be receiving on my savings accounts and my certificates of deposit. I want to know how much less I'll be paying for my auto loan and mortgage. And tell me just how much my "new bank" will be lowering the fees I pay on services.
I would also appreciate a full disclosure of how much insiders stand to gain personally (and I understand a very clear and concise explanation of how to determine specific dollar amounts was presented at the National Roundtable meeting) if a conversion to a stock institution eventually takes place.
Additionally I would suggest that legislation, both federal and state, be pursued that would strictly prohibit any monetary benefits from going to those individuals who represent present management or elected leaders at the time of any such charter conversion.
And finally I would promote legislation that would require the distribution of all equity of the credit union to the membership at the time of conversion. Let those who wish to move to another form of ownership find the capital to do so on their own.
Robert Bianchini
Retired President, Oklahoma CU League
Oklahoma City, Okla.
