Mass. Supreme Court Rules CU Can't Convert To Mutual
The Massachusetts Supreme Judicial Court has upheld the state regulator's ruling that quashed Postal Community CU's attempt to convert to a federal mutual savings bank.
Thomas Curry, who was the state's Comissioner of Banks at the time of PCCU's conversion application, determined that the credit union could not convert to a bank charter because Massachusetts law does not allow for "cross-industry" conversions of any kind.
The $128-million credit union appealed the ruling to the state Superior Court, which found in favor of PCCU, ruling that the credit union did have the right to convert and that the commissioner lacked the authority to halt the process.
But the Supreme Judicial Court overturned the Superior Court's decision, finding that the commissioner had not exceeded his authority.
"The commissioner argues reasonably that restrictions on cross-industry conversions are of long standing in Massachusetts; are well known to the Legislature; and would not be removed without a legislative mandate of undoubted clarity. We agree," the court wrote in its judgment.
Unless PCCU can find some other legal issue to tackle with regard to its conversion attempt, there is no other legal recourse for the 10,263-member CU, noted Rob Kimmett of the Massachusetts CU League.
Although the league was not involved in the legal battle, and PCCU is not affiliated with the league, MCUL saw the ruling as a positive. "We are of the opinion that members are best served by a credit union charter," Kimmett said. "The best possible situation for members, for them to have their needs met, is by a credit union with a credit union charter."
Among the options available to PCCU are to convert to a federal credit union charter and then attempt to convert under the federal statutes, or lobby the legislature to amend state law to allow for such "cross-industry" conversions.