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Self-determination is one of the great assets of the American financial system. Ours is the strongest financial system in the world because financial service providers have the basic freedom to decide what they want to be, and how best to serve their customers and communities. Unlike other countries, we have a dual banking system that promotes innovation and competition. Financial institutions sometimes change charters – from state to federal, federal to state, thrift to commercial bank and, yes, from credit union to mutual savings bank. As the CEOs of two mutual institutions, we know firsthand how mutual community banks have been helping Americans save and grow for almost 200 years. They are at the heart of a robust, consumer-oriented community banking industry dedicated to helping families. Mutuals are known for two outstanding qualities – independence and community service. It is wrong for a trade association – or a regulator – to oppose the business decisions that credit union leaders make for business reasons. Unfortunately, the National Credit Union Administration views the freedom to choose the way the former Soviet Union viewed Estonia’s decision to leave the bloc. Federal law permits credit unions to convert to mutual savings banks. But when some credit unions expressed an interest in this charter choice, the NCUA took steps, inappropriate steps for any financial regulator, to make those conversions increasingly difficult. And the NCUA’s decision was not based on safety and soundness but on a misguided determination to run roughshod over the regulated to maintain its empire. Why is the NCUA so afraid when only 22 out of nearly 10,000 credit unions have converted? Ironically, one of the NCUA’s favorite tools is to continually raise obstacles to credit union conversion in the name of “consumer disclosure.” But it is that very disclosure that the NCUA is inhibiting through threats and intimidation. If a credit union has the audacity to make statements without the NCUA’s blessing, the agency believes it has the authority to overturn a conversion vote if it does not like what was said in a free and open election. Credit union members have a right to sufficient information to make an educated vote on a charter change. That means releasing information that tells both sides of the story. But that’s not what’s happening when the NCUA fights to hold its empire together at any cost. Consider this: In Grand Rapids, Mich., the Lake Michigan Credit Union was effectively denied the opportunity to convert to a mutual savings bank. Its goal was to raise additional capital, expand its branch structure and increase its level of service to its customers and its communities. Lake Michigan believed it had a positive story to tell. But the NCUA made it virtually impossible to tell that story As a practical matter, anything that Lake Michigan wanted to say had to be approved, in advance. While demanding “consumer disclosure” on the one hand, the NCUA, by design, inaction, or both, gagged the $1.1 billion credit union from speaking freely about the rationale for its conversion. In the Lake Michigan case, the NCUA never responded to the credit union’s request to approve its answers to a reporter’s questions about conversion. And the story ran without their response. Opponents, including the well-heeled Michigan Credit Union League, launched media, direct mail and advertising campaigns to attack the conversion. Lake Michigan wanted to tell its side of the story, but its officers could not speak openly to the media, or even to its members, because of the rules the NCUA had imposed. Full disclosure? Apparently that doesn’t apply to credit unions that want to articulate the valid reasons for converting. Informed membership? Only if that information is screened by the NCUA censorship board. Ironically, as it puts the clamps on conversions, the NCUA seems more than ready to grossly expand the powers and reach of those willing to remain a subject of the crown. With no disclosure requirements to its members, or other credit unions in the area, the omnipotent NCUA allowed its Region V office to approve a “community charter” for the LA Financial Credit Union that includes all of Los Angeles County and its 10.1 million people. This required no decision in Washington. Apparently, it’s fine for giant credit union conglomerates to dominate small and mid size credit unions – but don’t let anyone try to convert to a mutual savings bank. How else can the NCUA explain a decision that allows 10.1 million people – more people than reside in 42 states – to be eligible for membership in a credit union because it is decreed to be a “community?” Credit unions have as much right to self-determination and charter choice as any other financial institution. They should be free to make decisions that are best for their institutions and the communities they serve. They should be free from regulatory interference that thwarts self-determination. And mutuality is a perfect option for those credit unions that want to make that choice. As CEOs of mutual institutions, we know first hand that this charter allows us to serve our customers and communities very well. And with 772 mutual institutions operating across the country, we would welcome any credit union seeking to convert so it can continue serving its customers and communities as mutual institutions. It’s time for Congress to take a serious look at the actions of this self-serving regulator and preserve the right of self-determination and charter choice. The NCUA must be stopped from undermining a basic tenet that has led to the success of our financial system and our nation – freedom of choice.

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