The Wisconsin Legislature’s Joint Financial Committee on Thursday approved a provision pushed by the banking lobby that would make it easier for credit unions to convert to banks.
Under the provision, state-chartered credit unions there could convert directly to banks, if their members approve, without becoming federally chartered or returning equity to members as is currently required. The provision is part of the budget bill that will fund Wisconsin’s government for the fiscal year beginning on July 1.
Both the Assembly and Senate must approve the measure before it is sent to Gov. Scot Walker. He has the power to veto individual line items and Wisconsin Credit Union League President/CEO Brett Thompson said his group would ask the governor to do so.
Thompson said the provision on conversions was inserted without prior debate or public hearings.
“The process by which this was approved is suspect because there was no previous debate. It was dictated by competitors to credit unions without input from credit unions,’’ he told Credit Union Times.
Currently, state-chartered credit unions can concert to a federal charter if they want to do a direct conversion to a bank.
They can also take a less direct route to becoming a bank by returning members’ money to them, dissolving the credit union and then seek deposits as a bank. Thompson said two credit unions have become banks using this method during the past 15 years.