Tuesday, March 19, 2013

Outrageous Cost of Charter Choice

It is estimated that HarborOne Credit Union spent $2.4 million to switch to a mutual bank charter. According to an American Banker story, this included $750,000 for legal fees, $520,000 for printing and postage, $260,000 for public relations and $235,000 for signage and stationary, among other things.

But why should a change from a credit union to a mutual bank charter cost so much?

The answer is simple -- NCUA's onerous regulatory burden, which runs up the cost of such charter changes.


  1. Other than the courts, the only way to hold accountable Cuna (cu not accountable) and NCYA, is conveniently the only way to break loose and grow without all the constraints- charter change.
    Cuna (cu not accountable) and NCYA knows this so they do everything they can. The cost is disgusting and entirely NCYA fault, but congress isn't doing their job.
    Cuna(cu not accountable) finds unemployed former cu staff or former NCYA attorneys to obstruct and then hides behind the weak mantra of "it's all about the members".
    No it isn't and we know it isn't. That's why the best cu's have disaffiliated and looked at charter change.
    My cu would've left a few years ago were it not for the obstruction, which needs a federal probe, cause its a legal right for a financial to choose its charter.
    The HarborOne members will GAIN in this deal.
    HarborOne will grow without so many constraints and never look back.
    The only ones that lose are Cuna (cu not accountable) and NCYA.
    Those of us that stay but want to leave need to deal with this thru lawmakers, who need to deal with NCYA.
    If we don't deal with this, we will eventually lose, too.
    $1.5million of the $2million is wasted money, could have been loans made to members.
    Still think it's about the members?
    It's about trade associations that don't have our back and don't get anything done.

  2. Cu trade groups have no benefit.

    Congress did not act against the former S&Ls regulator until the national S&L system captial ratio dropped to 2%. Only that motivated action.

  3. Or...just or...the charter isn't able to be updated because a bloated bag of bankers are playing both sides (cough cough Keith ABA/ICBA). You can't rant that the charter is too tight and then turn around and not let the charter be modernized.
    Time to stop fighting with yourself Keith.

  4. If you want to modernize your charter, you should go all the way. This would include your special tax treatment. However, I have not seen any profiles of courage coming out of the credit union industry saying that they would be willing to trade-off their tax exemption for more powers.

  5. Putting aside the inane anonymous comment that cough, coughed.
    Mr.Leggett, actually Tom Dorety suggested that the tax exemption be exchanged for increased powers.
    Credit Unions are stuck. Even Navy.
    Anyone I talk to that has looked at the tax exemption and the charter in a pragmatic, business-like way is not afraid of losing the exemption, we're just not going to volunteer. It's too easy this way.
    We'll continue as is until congress wakes up (never?) and realizes NCLU has no clue and is hurting credit unions.
    Or until the corporate bonds blow up (soon?).
    Or, they just decide they need the tax revenue.

  6. I worked for Beehive Credit Union (SLC, UT) when they attempted to change their charter from a credit union to a Mutual Savings Bank. From first hand experience I can say in my opinion the NCUA did seem punitive in the way they handled the attempted charter change. If the charter change had gone through I think there is a good chance that Beehive would still be around serving the public.

  7. I'm very familiar with the proposal from Tom Dorety. It is the same proposal floated by Bucky Sebastian. Basically, it says that credit unions get more powers but are only taxed if their reserves to asset ratio (net worth ratio) is above 12 percent. In other words, Sebastian and Dorety have crafted a proposal for a new charter that gives the illusion that credit unions are taxed without having them ever pay taxes.

  8. So the Dorety/Sebastian idea is delusional.
    Guess they thought no one would notice.
    Or maybe a starting point.
    Remember my board chair came back from a cues conference and told me no one liked the idea and couldn't believe cues bothered to have Bucky and Filson speak. Said its a waste of time.



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