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John Annaloro, CEO of the Washington State Credit Union League, released this statement about the ongoing controversy at Columbia Community Credit Union. Annaloro requested it be published unedited and Credit Union Times honored that request. “Columbia Credit Union must uphold the rights of its membership as expressed in law, including the state and federal credit union acts, applicable regulations and its bylaws. However, the twists and turns in the events at Columbia may continue for some time into the future. There’s an adage often heard in law school, `If the facts aren’t on your side, argue the law; if the law’s not on your side, argue the facts.’ The law may not favor Columbia, but the rightful need for fair process and member participation is responsible and understandable. Ultimately it may take litigation to determine if this issue is going to be settled by the rules, or what is right, or a combination of both. The DFI and NCUA appear to be doing an outstanding job in areas of supervision that are untested, feel underdeveloped, ambiguous, and with provisions that are possibly conflicting. Both the member group and the credit union are also doing tactically excellent work. Each is engaging legal and public relations assistance. The media coverage, both mainstream and trade press, is putting this conversion attempt in the spotlight. Our entire system can watch and form opinions that will serve, and perhaps save the movement. A bigger picture is emerging. Credit unions appear to be historically undervalued institutions. The real story may be about the moral character of today’s credit union leaders, when facing the temptation of easy management and wealth promised by conversion. Columbia Credit Union may have used a conversion consultant whose Web site seems to expose the roots of the issue. The online pitch points to articles that state, `The reward for performance could lead to a $10 million plus ownership stake for a capable CEO.’ The same article describes the stock conversion results of a credit union with $50 million in capital by concluding `Each member of a five director board would get $400,000 in stock, vested over five years, at the IPO value.’ It also links to a specific investment banking service provider, presumably so board members and CEOs of converting credit unions can obtain personal financial backing to make additional gains during the conversion. It’s outrageous. And contrary to the people-first, not-for-profit, fundamental philosophy that has defined the credit union system for over 100 years. Still, this offer seems to have introduced the moral hazards of financial gain into board decision-making at an unprecedented magnitude in the history of the credit union movement. It’s a test of character for all of us. My personal opinion is that a healthy sovereign national financial system needs a strong cooperative credit component. Because of chartering and growth limitations credit unions like Columbia are irreplaceable. Additionally, the annual net economic loss to consumers in the community could mount into the millions, if figures from the Consumer Federation of America regarding average bank-credit union rate and fee differentials were to eventually apply. A lot is at risk. Each conversion from credit union to bank weakens our ability to serve a nation with affordable financial services. Every credit union is important. The work at the Washington Credit Union League remains focused on improving the quality of the charter, so that credit unions can self-determine their future without the need to consider conversions. We are committed to the promise of a brilliant future for every credit union, and a progressive charter for the 21st century. The occurrences at Columbia illustrate the timely importance of the League’s objectives, and why they are worthy of our system’s best efforts.”

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