I recently received an email from a group of Washington lawyers who ply various trades of a legal nature, including trying to convince credit unions that switching to a mutual charter (with the not-so-subtle understanding of a later move to stock) would be a great idea.
This group proudly proclaims that they’ll be hijacking an upcoming directors’ conference to take this topic out of the breakouts into the general session. They’re emboldened by my friend, ex-banker and perennial CRA-for- credit unions advocate, Jim Blake’s attempt to convert Harbor One back to his preferred for-profit status.
What is bemusing is that anyone would think that it would be better to be a bank after witnessing the past five years of bloodletting in that sector.
In North Carolina alone last year, four banks went under, 15 are under direct regulator supervision, 29 took TARP money and only five have repaid the Treasury. Zero credit unions went under. Several large banks, including Citigroup, SunTrust and Ally failed Fed stress tests last week, and few observers think that the really big banks are completely out of the woods. So, this is the risk pool that these bank advocates would have you join?
As CEO at FDIC Federal Credit Union (now The Partnership FCU) for nine years, I came to know and love the bank regulators; best credit union board anyone could ever hope for. Do FDIC and OCC have top-notch personnel, including their examination teams? You bet’cha. Unfortunately, credit unions would be such a small part of their focus that our unique character and philosophy would likely get run over like a possum on the way to Myrtle Beach.
At the end of the day, credit unions are clearly best served by our own, albeit imperfect, regulator and our sound, albeit relatively modest, deposit insurance fund, with our ever vigilant and thoughtful input to improve where needed.
And those die-hard bankers, who’ll never understand the difference between prioritizing the member-owner over the growth of the institution and their own compensation, are welcome to leave the industry, but they need to leave their members’ capital with the member or the surviving credit union. And please, take your attorneys with you.