The 70,000-member, $1.7 billion Technology Credit Union of SanJose, Calif., has broken new ground in its attempt to convert to amutual bank charter.

The credit union has downplayed more frequently heard argumentsfor why its members should vote to discard the credit union charterin favor of a set of unusual contentions that cite Debbie Matz andraise the possibility that the credit union tax exemption may berepealed.

The credit union's board of directors notified members inOctober 2011 that it was considering proposing the credit unionconvert to a mutual savings bank. Technology Credit Union'sarguments in favor of the move came in the packet of disclosuresthat the NCUA mandates the credit union send to members in advanceof voting on whether or not to make the change.

In broad strokes, Technology advanced familiar arguments.Becoming a bank will enable it to offer more products and servicesthan it can as a credit union, Technology wrote. Becoming a bankwould enable it to serve a greater number of people without a fieldof membership restrictions, it added. But the newer parts of thearguments made their appearance in the details.

For example, when advancing the position about member businesslending, Technology took the approach of citing Matz to bolster itscontentions.

The credit union said its board found it “prudent” to addressthe need to make more business loans before it approached the MBLcap of 12.25% of assets.  It quoted Matz's testimonybefore the Senate Banking Committee on June 16, 2011.

“As noted by NCUA Chairman Debbie Matz in herstatement….regarding the member business lending cap, 'With the[member business lending] cap, it is difficult to achieve thenecessary economies of scale in terms of personnel and systems tomake this type of program cost effective,'” the credit unionwrote.

Technology also cited Matz from the same hearing saying themember business lending cap “limits credit unions' abilities todiversify their loan portfolios.”

As of the end of March, the credit union reported $88 million.or between 5% and 6% of assets, in member business loans.

In addition, in an appendix, the credit union also advanced theargument that the likelihood that credit unions faced taxationmeant that its members should consider becoming a bank now.Technology noted  that a subcommittee of President Obama'sEconomic Recovery Advisory Board had listedeliminating the federal tax exemption for large credit unions as apossible way of raising federal revenues.

“While we cannot predict whether credit unions will lose theirfederal tax-exempt status, the Tech CU Board and managementbelieve….that the repeal of the tax exemption, particularly forlarge credit unions such as Tech CU, has in recent years become apossibility to be considered and, as a result, consider this as oneof many factors in evaluating the charter change,” the credit unionwrote.

However, in other ways, Technology Credit Union continued to usestrategies adopted by other credit union seeking charter change,including offering cash and other prizes to encourage members tovote in the conversion balloting.

In a brochure accompanying the conversion disclosures,Technology offered members a chance to win $15,000 in cash and fourApple iPads as an inducement to vote.

The brochure said changing the charter would allow the creditunion to “offer a full range of innovative products and services”as well as “maintain our competitive pricing on deposit productsand low loan rates and fees” and “provide the financial resourcesto help you achieve both your personal and financial goals.”

The brochure also said that participation in CO-OP FinancialServices fee-free ATM network would continue, though itacknowledged that shared branching would end.

Member reaction to the disclosures has been largely quiet, but afew members have begun to speak up in opposition.

Retired quality control manager Robert Marinace, a member ofTechnology since 1978, expressed skepticism that member businesslending was enough of a reason to stop being a credit union. The84-year-old member said he suspected the desire among credit unioninsiders to reap a windfall from issuing stock as a bank waslargely responsible for the credit union's enthusiasm for thecharter change, even though the credit union has said it does notplan, as of now, to issue stock as a bank. “There is an awful lotof money, millions of dollars, which can be made from this,” hesaid.

Carlos Rodriguez, an entrepreneur and former credit unionemployee, objected to the proposed conversion on a number ofgrounds. He said he believes credit unions provide a more sociallyresponsible and effective approach to financial services.

He also said he severely questioned some of the credit unionmanagement's assertions, such as the notion that it couldnecessarily serve more people as a bank than as a credit union.

Rodriguez, who acknowledged being a strong supporter of creditunions, pointed to the credit union's March 2012 Call Report inwhich Technology reported that the population of possible membersin its four-county field of membership stood at 1 million, whichthe credit union has only managed to draw just over 69,000members.

Rodriguez belongs to Technology as well as other Californiacredit unions, and he has launched a Facebook page called Please Don't Go to convincethe credit union and its members not to leave the charter.

“Tech CU, you say it's you not me,” Rodriguez wrote in theintroduction to linked video he posted from Willie Nelson. “It'shard to hear that you think you'll be happier as a mutual savingsBANK instead of a credit union. Was it something I said?”

Rodriguez said he has been a member of Technology Credit Unionsince April of this year and that he joined because he wanted toestablish a tie with a credit union in the San Jose community wherehe is starting up a new firm. He said he found out about theattempted charter change when he went into the credit union to opena business account.

“I explained to the representative that I really wanted to bringmy business account to a credit union, and the representative waskind enough to say, 'Oh, well, you should know that we are movingto become a mutual bank,'” Rodriquez recounted, adding, “needlessto say I didn't open my account at Tech CU.”

“I know it will sound corny,” Rodriquez said, “but I believe incredit unions because, when they do things correctly, they can beamong the single most powerful weapons against poverty.”