A coalition of Community CU members-many of them with longstanding ties to the credit union industry-is going up against a coalition of former credit union CEOs who converted their CUs to banks as the battle over credit union-to-bank conversions heats up in the Lone Star State.
The Coalition for Credit Union Charter Options (CCUCO), headed up by several CEOs who converted their credit unions to bank charters, is criticizing the Coalition for Member Trust (CMT), which was formed by members of Community CU to oppose the conversion of the billion-dollar institution to a mutual bank charter.
"The problem is, when credit unions that are trying to convert issue their disclosures, everything has to be scrutinized very carefully by several regulatory agencies, while these opposition groups, like the Coalition for Member Trust, can say anything they want," said Lee Bettis, executive director of CCUCO and the former CEO of AGE FCU, Albany, Ga., from which he retired several years after the CU converted to become Heritage Bank of the South. "I know it sounds clich?, but we really are about ensuring there's a level playing field. It's not right that what the credit union board and management can say about these conversions is very strictly regulated, while these groups can say just about anything they want."
That's why letter the CCUCO sent to CMT founding members Mark Arnold and Elaine Laroa ended with the statement, "The Coalition will monitor your actions closely and hold you accountable for your published statements"-a sentence that Arnold and others opposing CCU's conversion have interpreted as a threat.
"It really wasn't meant to be threatening," Bettis told The Credit Union Journal. "Really, we are not in a position to threaten a lawsuit over the outright lies that they are spreading. That is up to the board and management of these credit unions. But that doesn't mean we might not suggest such action to them."
'Willing Pawns'
In Bettis' letter to Arnold and Laroa, a former Texas league employee who is currently with Texas FCU, he accused the two Community CU Members of being "willing pawns to the state and national trade associations" and suggested that CMT's members are not "true representatives of the membership [of Community CU]."
Arnold, who previously worked at Community Credit Union, is now senior VP with Neighborhood Credit Union in Dallas, and the son of former Texas league President John Arnold. Arnold said his work in forming the Coalition for Member Trust is being done on his own time and is unrelated to his position with Neighborhood CU.
The CCUCO also suggested that North Carolina-based State Employees' CU CEO Jim Blaine and others who are not members of Community CU "have their fingerprints all over" the opposition efforts, which he said calls the entire group's legitimacy into question.
But Arnold pointed out that the Coalition for Member Trust has made no bones about the fact that it was started by "industry insiders" and is soliciting aid from credit unionists across the country.
"First of all, I didn't realize that there were 'true' members of credit unions and 'false' members of credit unions. Do they do blood work to determine that? I have been a member of Community Credit Union for 10 years. But apparently if I work in the credit union industry, then I'm not a true member," Arnold told The Credit Union Journal. "Yes, some of us are people who have worked in the credit union movement. In fact, I worked for Community Credit Union. That's because it's going to take some industry folks to help educate the non-industry people, those 'true' members, the average members, about what is really going on here. We have already had some 'true' members-people who have never worked in credit union land-join the coalition, and we expect more to join in the weeks ahead."
As for invoking the name of Jim Blaine, Arnold confessed he had never met the well-known CEO of SECU before Blaine traveled to Texas to stand outside of Community CU's recent annual meeting. Moreover, if Bettis and the CCUCO are going to criticize non-Community CU members for getting involved, Arnold said, "I suggest they look at their own letterhead. They're not based in Texas, and so far as I know, none of them are members of Community CU. At least our coalition is based in Dallas, Texas and was initiated by actual members of the credit union."
But Bettis said that is missing the point of what he and the CCUCO are trying to do.
"We are not in favor of Community Credit Union converting to a bank, nor do we oppose it. We simply want to protect the right of credit unions to control their own destinies, and that includes the option to convert to a bank," he said. "We are not getting involved in this conversion, that is between the credit union and its members. But we don't think it's right that these groups can get away with saying whatever they want about these conversions."
In its disclosure to members, Community Credit Union said it needs to convert to a mutual savings bank charter because it needs additional capital, stating that capital limitations have forced it to put a cap on its growth.
Members of the credit union are being offered $20,000 in prizes to entice them to cast a vote on the conversion.
Community Credit Union is not alone in the Dallas/Ft. Worth metroplex in seeking to convert to a different charter. The billion-dollar OmniAmerican Credit Union in Ft. Worth has also informed its membership of plans to convert to a bank charter. At press time it was unknown if any members or groups were stepping up to oppose that conversion.
In his letter, which Bettis described as being "as cordial and non-threatening as possible," he called attention to "the numerous spurious and specious claims" CMT has been making about Community CU's conversion plan, including:
* Saying members will lose their one member, one vote ownership status, when in fact the credit union will still be under a mutual charter that does allow the membership to vote. But Bettis conceded that while every member will be able to vote, the strength of each person's vote will be based an individual's deposits.
* Suggesting conversion will "sail us down the river in terms of losing hundreds of millions of dollars," when actually, Bettis said, the value of the credit union will be increased by the sale of approximately $100 million of stock in a future stage, all of which remains under the control of the mutual depositors."
The figure does not include the $1.4 million the credit union said it will spend on the conversion attempt.
Emotionally Charged
If it's one thing Bettis completely understands, however, it's the emotionally charged nature of this entire battle.
"I know how emotional this is, because I have been there," Bettis said, referring to his leadership of AGE FCU's conversion to a bank charter. "If I were the board and management of a credit union looking to convert today...these are people who have devoted their entire lives to serving their members and their community, and now you've got people accusing them of stealing member assets, of greed and of not caring about their members. That hurts.
"What [conversion opposition groups] don't understand is that this is a difficult decision for everyone. Your whole philosophy changes a bit, but you've been so indoctrinated by the credit union movement, that you feel it strongly," he continued. "But then when it's finished, you realize how little has actually changed, and you go right back to serving your members."
Only they aren't members anymore, they're customers, and that, Arnold suggested, is exactly the point. The Coalition for Member Trust has created a website at www.membertrust.org at which it is accepting donations to underwrite the cost of distributing materials about the conversion to CCU members.
Repeated calls to Community CU CEO Gary Base were not returned at press time.
