TCUL Rejects 'Bully Tactics' Of Ex-CUs

Register now

The Texas Credit Union League is saying Loene Star State CUs will not be intimidated by the "bully tactics" of a group of former credit unions-turned-banks that threatened the CEO of a small credit union that is pledging funds to advertising aimed at members of two Texas CUs seeking to convert to banks.

Texas Credit Union League President/CEO Dick Ensweiler sent a letter to the "Coalition for Credit Union Charter Options" calling the Coalition's intimidation tactics "unconscionable."

From his cell phone while traveling to Texas league's annual meeting late last week, Einsweiler said, "The whole issue with us is there is no way that some group that purports to be protectors of charters should be intimidating anybody - especially the CEO of a small credit union that understands the value of the charter."

The Coalition, based in Washington D.C., was formed in February 2004 by bankers who helped their former CUs become banks. The advisory board includes three former CU leaders:

* Garry Graham, president/CEO of BancAffiliated, Inc., parent company of Affiliated Bank of Bedford, Texas, which converted from a federal credit union in June of 1998.

* Herb Moltzan, president/CEO of BUCS Federal Bank of Owings Mill, Md., which converted from a federal credit union in 1998. Moltzan was a former NCUA examiner.

* Laurie Stewart, president/CEO of Sound Community Bank in Seattle, Washington, a federally chartered mutual savings bank that converted from Credit Union of the Pacific in May 2003.

The letter to Craig Rohden, CEO of the $19-million Space City CU in Houston was signed by the group's executive director, Lee Bettis, former president/CEO of AGE Federal CU in Albany, Ga., which converted to a bank under his leadership.

Bettis fired a letter to Rohden on March 30 warning: "If you persist in with your plan to run advertisements, the Coalition will monitor your actions closely and hold you accountable for your published statements."

Bettis accused Rohden of being part of "an outspoken minority in the credit union movement" opposed to credit union-to-bank conversions and added that "many credit unions around the country want to preserve the right to do so."

Wrong, wrote Ensweiler to the Coalition.

"In fact, Mr. Rohden is part of an overwhelming majority of credit union leaders who view the conversion of credit unions to banks as a complete abandonment of the very principles upon which credit unions were built. It has been my experience that nearly all credit union leaders share Mr. Rohden's passion for preserving the credit union charter, particularly given the recent profession by national banking groups that credit union conversions are the newest focus of their decades-old effort to drive credit unions out of the financial services marketplace."

Ensweiler stated that as two proposed conversions garner the attention of CU members in the Dallas-Fort Worth area-Community Credit Union and OmniAmerican Credit Union-it is imperative that these credit union members be given all the facts without all the spin.

"It is unconscionable that a group of bankers from outside the state would resort to implied legal threats and intimidation schemes to try to muzzle the opposition," Ensweiler wrote in his letter to Bettis dated April 5. "I suggest your organization refrain from these tactics and instead encourage a full, open discussion about these proposed conversions."

Rohden said he had no plans to respond to the Coalition.

"I'm not going to dignify the letter with a response," he said. "I find it amusing that former credit union leaders turned bankers had to form their own group to justify their decisions to convert."

Rohden said he was "inspired" to get involved in educating members after reading CU Journal Editor Frank Diekmann's column (March 21), titled "Two Intertwined Texas Tales That Are All About Trust." In that piece, Diekmann addressed the proposed conversions of Dallas/Ft. Worth metroplex credit unions Community CU and OmniAmerican CU and criticized the Texas Credit Union League for not being proactive in providing information to members on how conversions impact them. In it, he asked, "If credit union leagues aren't willing to stand up and defend the value of credit unions, who will?"

Rohden said, "That was a great editorial and one of the reasons I'm doing this."

His first action was notifying one credit union in his area that his CU would put up $1,000 toward an ad campaign aimed at informing members of CCU's and OmniAmerican's pending conversions.

He said word about his offer apparently spread after he wrote a letter to Henry Wirz, CEO of SAFE CU, Sacramento, Calif., after learning Wirz said he favors allowing banks to participate in credit union shared service centers. "Who's side are you on, anyway?" Rohden asked Wirz.

Rohden's letter went on to state, "The fact that CCU plans to jump charters and convert millions and millions of dollars from CUs to banks should make every credit union person sick. If CCU management and directors want to work for a bank, maybe they should just resign their positions and apply at a bank."

He went on to explain how service center networks were created so credit unions could compete with the big banks that could afford to place a branch on every corner.

"Why would any credit union choose to give up one of its competitive advantages and simply allow the competition to use it too?"

With the vote on the conversion at Community Credit Union now under way, Rohden said he felt compelled to take immediate action. "Something has to be done before these members get the wool pulled over their eyes," he said.

Since his initial ad campaign pledge, officials from two other CUs called to express interest in supporting the advertising effort, Rohden said, adding that he expected much more support once the news hit the presses. Rohden estimated the cost for an ad in the Dallas press would run about $10,000.

"If Mr. Rohden and other credit union leaders wish to help educate the credit union members in question, more power to them," Ensweiler's letter stated.

For reprint and licensing requests for this article, click here.