Wisconsin CUs Fight Plan That Would Make It Easier To Convert To Bank
MADISON, Wis.-The Wisconsin Credit Union League has mounted a lobbying effort against a provision in the state's budget bill that would allow direct conversion from a credit union charter to a banking charter.
League President and CEO Brett Thompson said that while the precise statutory language has not yet been made available to the public, the general content of the rule would allow CUs to convert directly, with fewer of the safeguards that are currently in place.
"Credit unions in Wisconsin already have an opportunity to convert to a mutual savings bank or a stock bank if they so choose," he said, adding that CUs also "always have the [option] of liquidating the credit union, returning the capital to the members and then soliciting the deposits and business of those members as a bank after that. So this is an unneeded provision and it's totally inadequate in terms of the member-owners of the credit union."
Thompson said the provision has been promoted by the Wisconsin Bankers Association, along with the Coalition for Credit Union Charter options, a group that has been supportive of such measures in other states. While Thompson does not know specifically which member of the legislature inserted the provision into the bill, "it obviously had some support by the members of the joint finance committee who have advanced the provision."
Both houses of the Wisconsin legislature are currently controlled by the GOP, and Gov. Scott Walker is also a Republican. While the league has not had problems in the past with the joint finance committee, Thompson said that "this provision was also initially included in the budget bill two years ago. ... The reason it's being introduced today is that they were unsuccessful last time," after the amendment was vetoed by then-Democratic Gov. Jim Doyle.
Lack of Notice
According to Thompson, the primary concern with this direct-conversion provision is that "you are converting a not-for-profit entity to a for-profit commercial bank, and you're doing so without so much as a public hearing, without notice to the credit union industry here in the state of Wisconsin, and you're doing so in the dark of night. The objection is to the policy behind this proposed amendment; we do not believe it contains the necessary safeguards for member-owners of the credit union."
The entire issue, he said "is not even germane to the subject of the state budget."
Because the state's current political makeup may lend the provision greater chance of making it through the statehouse and being approved at the governor's desk, the league is relying on a network of grassroots activists, as well as reaching out to members of the legislature to "ask those members to ask that this provision be pulled when the bill comes before both houses."
The state's credit unions have also reached out to the governor, requesting that he veto the provision.
"Wisconsin has a very long history of being supportive of cooperatives in every form," said Thompson. Such institutions "have such a positive influence on the lives of our citizens that it's hard to find people who would say that they don't support cooperatives." But, he added, people don't always make the connection that credit unions are also cooperatives.
"Whether it be the delivery of electricity or telephone services, cooperatives abound in the state of Wisconsin and there are an awful lot of folks in the legislature who are extremely supportive of co-ops, including credit unions." The passage of this amendment, moreover, "would be a real black eye for Wisconsin's long support of the cooperative movement.'
While Wisconsin's state budget woes have made plenty of headlines this year, Thompson said that this issue has not received extensive coverage, although some media-beyond just the trade press-has picked it up. "We believe we will get more [media attention] as this is better known, but the blunt reality is that we've become a hotbed for controversial issues, and many things that also change our state laws are getting attention as well."