CUNA Sends Letter On Conversions To Congress
CUNA has sent a letter to certain members of Congress on the issue of charter conversions.
In its letter to members of the Senate Banking and House Financial Services committees, CUNA stated that the character of a not-for-profit credit union "materially changes" when it switches charters to a mutual savings bank. CUNA said the letters, from CEO Dan Mica, were intended to help the key legislators better understand the regulation and process of CU conversions. The communications also addressed some misconceptions that were evident at a recent hearing before the House Financial Institutions Subcommittee.
The letters followed those sent by banking trade groups to the committees commenting on NCUA's powers in the conversions process. In his letter, Mica notes:
* Mutual thrifts are not just credit unions by another name. When a not-for-profit credit union converts to a for-profit bank, the character of the institution materially changes;
* Fresh evidence of the CU difference appeared in a recent American Banker newspaper poll showing credit unions rated considerably higher than banks and many other for-profit financial providers in consumers' estimation of which institution "does what's best for me, not just its own bottom line."
* The National Credit Union Administration ensures the interests of member-owners are protected in the conversion process. The Office of Thrift Supervision's conversion rules do not protect the fiduciary interests of credit union members in the ownership of their institutions and their capital.
* NCUA's disclosure requirements are designed to be meaningful to the member, not burdensome to the credit union.
"Congress has acted time and time again to ensure full and fair disclosure to consumers," Mica explained. "Because ownership interests of the members of a credit union differ from the interests of savings bank depositors, it is critical that consumer-members of a credit union understand what they are giving up, should a conversion occur. As directed by Congress, NCUA must ensure that happens."