Several items related to charter choice recently caught my attention.
The first was an update on a lawsuit filed by First Basin Credit Union of Odessa, Texas. The second was a letter to the editor of Credit Union Times by the CEO of First Entertainment Credit Union (Hollywood, CA) cautioning credit union trade associations from meddling in the the internal affairs of credit unions exercising their rights to switch charters.
First Basin Credit Union is seeking $24 million in damages over its aborted attempt to switch to a bank charter.
According to Credit Union Times, First Basin has amended its complaint and is seeking damages from the Texas Credit Union League, the National Center for Member Trust, and North Carolina-based Self-Help Federal Credit Union.
First Basin Credit Union claims that the defendants manufactured the dissident group – Save First Basin – that opposed First Basin’s conversion and caused damages to the credit union.
The lawsuit has been going on for over three years.
Chuck Bruen, the CEO of First Entertainment Credit Union, wrote Credit Union Times that if the California Credit Union League (the League) moves forward with its plan to educate members over Technology Credit Union's decision to seek a mutual savings bank charter, things could get awfully messy.
He points out that NCUA oversees all member communications by a converting credit union. This information is "pre-screened and pre-approved by the NCUA." (emphasis added)
So, how can the member be misinformed?
He further notes that the League is not a neutral by-stander. The League will decide what information will be made available to educate the members and the presentation of the information is unlikely to be "fair and balanced."
The letter states that this attempted obstructionism could become unsavory and may expose the League to legal liability.
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We can always rely on the CCUL for fair, balanced, objective analysis on what is good for the credit union community especially when it comes to credit union to bank conversions. The CCUL can be completely objective. The fact CCUL income is based on dues paying card carrying credit unions has nothing to do with there opposition to these conversions. To hell with credit union members' notions of fair play and democratic choice. When it comes to the best interest of credit union members let the CCUL make the decision.
ReplyDeleteThe same can and should be said about the ABA. Does the primary national banking trade association want any of its members to convert to credit unions and lose the dues revenue? Don't think so!!
ReplyDeleteAnonymous:
ReplyDeleteABA supports charter choice.
Please see earlier November post on Thrivent's announcement to switch to a credit union charter.
Obstructing Conversions Is Unsavory
ReplyDeleteConsumers Can Protect Themselves By Moving On If Unsatisfied
By Charles Bruen
President/CEO
First Entertainment CU
Hollywood, Calif.
From the November 16, 2011 issue of Credit Union Times Magazine
Credit Union Times recently published my letter [Oct. 12, page 30] where I argued that interfering with any credit union’s internal governance is an ugly business and is not proper behavior for a trade association.
The California Credit Union League’s message has been that they see their role as “educating members.” They have said, “It is essential that Technology Credit Union members understand the unique benefits which are only available through credit union membership.”
I’ve been told that the CCUL position statement on conversions includes an action item to direct members, the media, and the general public to a central repository of information regarding conversions and their impact on members.
If the CCUL were to implement its plan, it could make an awful mess of things. The NCUA is already overseeing everything the converting credit union said to members, so how is it possible that members could be misinformed?
Unlike the neutral action that the CCUL pretends the repository would be, it would be an obstructionist tactic that is problematic in several ways. As the manager of that website, the CCUL would control what goes on the site and becomes the judge, jury and executioner of the content. A fair and balanced presentation is unlikely considering the obvious pro-credit union skew. The repository website would simply be a bunch of pro-credit union and anti conversion articles.
Very unsavory stuff. Who would corroborate the website’s information or could outright lies and falsehoods be posted? Unlike the membership vote-related content on the converting credit union’s website that is pre-screened and pre-approved by the NCUA, the CCUL’s repository would be ripe for manipulation and malicious abuse–perhaps even leading to lawsuits.
That exposure to legal liability is not just theoretical. The Texas Credit Union League is currently being sued for $24 million its direct involvement with an out-of-control repository website attack against one of its dues-paying member credit unions–First Basin Credit Union of Odessa, Texas.
The point is that if such a misguided plan is implemented in California, the repository could be easily abused and could result in a legal liability for those involved in its creation. And what does it really accomplish anyway? It is predicated on the belief that credit union members don’t fully understand their ownership interest in the credit union and that a conversion would automatically lead to higher loan rates and lower savings rates, a faulty premise in itself.
There is no need to protect these members. They are great at protecting themselves. They will switch financial institutions if they don’t like it post-conversion.