WASHINGTON (5/28/08)--Officials with the Credit Union National Association (CUNA) and some credit unions are happy to see that the pace of credit union conversions to mutual savings banks are slowing down, an American Banker article reported Tuesday.
Because credit union members have become more educated, switching charters has become more difficult, the article noted.
"The more disclosure there is, the more people seem to be against conversion," said Eric Richard, CUNA executive vice president and general counsel. "I really believe that the system was stacked in favor of management. It's less so now than it was before."
Bucky Sebastian, CEO of the $2.1 billion asset Tampa, Fla.-based GTE FCU and head of the National Center for Member Trust, Raleigh, N.C., nixes the idea that credit unions convert so they can better compete, the article said. The actual motivation behind the majority of conversions is greed, Sebastian told the American Banker.
Top executives and directors--not rank and file credit union members--are the ones who realize profits when converting credit unions become stock companies, Sebastian continued.
The credit union industry wants to maintain the status quo with the National Credit Union Administration setting the rules, because easing restrictions against conversions would only diminish the strength of the credit union movement, the article noted.
"Those of us who have been in the credit union movement and have a very strong affinity for it would tell you that the issue is all about the membership and the ownership structure," Tom Dorety, CUNA chairman and CEO of the $6 billion asset Tampa, Fla.-based Suncoast FCU, told American Banker.
"At the end of the day, [if conversion] becomes something that is routine and easy, it certainly weakens the entire credit union system," Dorety concluded.
courtesy of cuna.org