Charter Choice Strips Members of Their Equity Is A Red Herring

The Wisconsin Legislature’s Joint Finance Committee voted last week to include language in the state budget bill that would make it easier for a credit union to switch to a mutual savings bank charter, if certain requirements are met.

The Wisconsin Credit Union League reacted by stating that the legislative language would strip credit union members of their equity in the cooperative financial institutions they own.

Excuse me, what ownership equity is being stripped?

Is there an account at Wisconsin credit unions that provides detailed information about the amount of equity that each credit union member owns in his or her credit union?

Can Wisconsin credit union members redeem their equity when they leave the credit union?

Can they sell their equity interest in the credit union to others?

The answer is no to all of these questions.

The only way members are going to see this equity they own in a credit union is if the credit union voluntarily liquidates and is solvent.

However, this is a rare event.

According to NCUA, there were ten voluntary liquidations of credit unions between the beginning of 2007 and the end of 2009.

The Wisconsin Credit Union League is trying to scare credit union members into believing that they will lose their equity interest if a credit union becomes a mutual savings bank.

But this is not the case. Switching to a mutual savings bank will not deprive credit union members of their equity interest.

This argument that members will lose their equity they own in a credit union is a red herring.