I found recent coverage about the Wisconsin state legislation governing credit union charter conversions to be disturbing, but not for the reasons one might immediately think (
The state's governor just approved an amendment into law over the strong objections of the credit union community. The Wisconsin Credit Union League's reaction was a bit embarrassing — way over the top in its doom scenarios. Despite those protestations, many credit union leaders would agree that state-chartered credit unions should at least have parity with federal credit unions when it comes to the option to convert. And if the state law offers more choices and authorities, that's even better.
It is that constructive and innovative interplay between state and federal laws that makes the dual chartering system so valuable.
The Wisconsin League's biggest complaint about the new law is that it only requires a majority vote of those credit union members that participated in the charter conversion choice, rather than an absolute majority of all members of record. The League was disingenuous in arguing that the impossible vote hurdle they advocated was good public policy. It was instead ridiculous. If it was such a great idea, why not apply it to Wisconsin credit union board member elections, credit union to credit union mergers, or other important membership votes?
It is unlikely that anyone running a credit union would think that was a good idea, since an absolute majority vote requirement would be extremely difficult to meet. I can't help but suspect that the Wisconsin League's complaining was self-serving and not in the best interests of credit unions or their members.
I agree that the Wisconsin bill could have been more thoughtful and could have included other protections that credit unions thought were important. That being the case, why didn't Wisconsin credit unions propose a responsible and realistic conversion statute? Why does it always seem that credit unions react to events and never lead them? In Wisconsin, as well as many other states, CU leaders appear to be well versed at playing defense but rarely take the offense...against banks or anyone else.
A Lesson For California
There is a lesson for California in this embarrassing Wisconsin fight. The same thing could happen in our state. So why sit around and wait for some bankers group to lobby the legislation for a decent charter conversion process? Credit unions, via their trade associations, should draft a realistic charter conversion bill the way they think it should be written and then proactively lobby to get it approved. That's called leadership.
Our credit union has no plans to convert its charter, but having that strategic choice well laid out and unobstructed by ridiculous hurdles provides a contingent path in an uncertain future. Every state-chartered credit union deserves the clarity that a conversion law like Wisconsin's puts on the table. The California/Nevada Credit Union Leagues, and credit union trade associations in many other states, should be taking a leadership role rather than being relegated to shedding crocodile tears after the fact.
Charles A. Bruen, CEO
First Entertainment Credit Union,
Hollywood, Calif.
