CU-to-Bank Conversions Reminiscent of Sea Change in Utilities

I found interesting Mike Welch’s Jan. 19 column regarding credit union efforts to convert to bank charters, “Community CU Wants to Become a Bank. Will it?” One comment was especially thought provoking. He wrote, “It baffles me how so many members can’t see through this blatant manipulation.” It used to baffle me too, but then I recognized that the CU-to-bank conversion effort is analogous to the “public/municipal utility to private utility” conversion efforts of the `70s, `80s and `90s. During those three decades, people in communities across the country were told that their public utility companies were wasteful, lacked economies of scale, and should be privatized – turned over to publicly traded companies. The publicly traded companies and their bankers and political allies promised lower utility costs and lower taxes. Well, for anyone paying attention, the privatizing of public utilities has proved a disaster – higher costs to consumers, no influence on the businesses, nor any control over the impacts on the communities. But, for one group it was not a disaster – the shareholders and managers of those for-profit companies, and, of course, their bankers. They all made money by two means: 1) by garnering higher prices for their now monopoly services, and 2) by taking over “public assets” worth billions of dollars, at little or no cost. In other words, they acquired (stole?) the assets built up over long periods of time by the communities and their citizens. Why did people allow this to happen? We’ve all been led to believe that government is less efficient than business, and that the “for-profit model” is better than any other approach to enterprise in all circumstances, at all times. It is the first notion that leads us to “put down our guard.” And it is the second notion that blinds people to the “profit motives” of people who seek to acquire assets they themselves have not generated. I believe this is why CU members don’t respond passionately to having their assets (actually equity capital) taken from them. Too many of us have been “educated” to think this is “business as usual.” It is disappointing to see CU folks rail against this trend in their own industry, while failing to recognize that it has been going on across the country for a long time, to the detriment of us all. I’m afraid too many of us saw nothing wrong with the practice, until it arrived at our doorstep. Greg Crandell Vice President Digital Mailer Reston, Va.