Two credit unions seeking to become federal mutual thrifts will be allowed to keep their one-member, one-vote framework.
Recent waivers issued by the Office of Thrift Supervision would let $180 million-asset Synergy Federal Credit Union, Cranford, N.J., and $29 million-asset Ohio Central Federal Credit Union in Dublin maintain their credit union-style voting framework for at least two years.
The waivers are helping to blunt a common criticism of credit unions pursuing thrift charters: that the switch to a "patronage" voting system is undemocratic. Typically, members of mutual thrifts are assigned voting power on the basis of their deposits-one vote for every $100 deposited.
"We are pleased any time another financial institution takes steps to adopt the pro-consumer policies practiced by credit unions everyday," said National Credit Union Administration Chairman Norman E. D'Amours, calling the waivers a "positive development."
Whether the OTS will continue to grant such waivers-or, at some point, give all mutual thrifts the option to adopt a one-member, one-vote governing style-is not yet clear.
Sources familiar with both credit unions suggested that member opposition was not the main reason for seeking the waivers.
"It seemed to be a very hot item with the regulator and with the trade association, more than with our members," said Robert W. Hughes, president and CEO of Ohio Central. He added that while he personally favors the one- vote-per-member system, many cooperatives, such as farm co-ops, base votes on deposits.
In Synergy's case, the New Jersey Credit Union League tried to block the switch. "I think it (the waiver request) was nothing more than a cynical bone that was thrown at credit union activists," said Russell Clark, the league's president.
Scott Sutherland, a spokesman for the Credit Union National Association, said the pursuit of waivers "is clearly a sign of duress" in the credit union movement. Between lawsuits filed by banks, the recent Supreme Court decision in the AT&T Family Federal Credit Union case, and congressional efforts to alter the nature of credit unions, "there's a lot of pressure being put on (credit unions) to convert," he added.
Because of a successful conversion vote this month, Synergy, which expects to officially become a thrift on May 1, will be the first to exercise the waiver. Ohio Central's conversion balloting ends April 22.