Whenever credit union groups meet, it is almost a certainty that before the event concludes an award presentation of some kind will have taken place. Credit union folks love to give and receive awards. Yet one important award is never presented, but should be. Guess I’ll have to do it. I call it the Stupid Award. Pretty harsh? Yes, but while others just whisper about those who should be recipients for this new award, I decided to stick my neck out and single them out. Without question the first Stupid Award must go to all those credit union members being led by the nose by greedy CEOs, management staff, and boards to vote to convert their credit unions to a bank charter. It’s not the staff and board who are stupid. They know exactly what they are doing and what they can expect to get out of misleading their memberships. No, this award belongs strictly to the members voting yes. Several years back, the CEO of what was at the time a credit union seeking to become a bank, reacted angrily to a column I had written. I more than hinted that just maybe his credit union’s members didn’t really know what they were voting for or against. “Are you calling my members stupid?” he asked me. “No,” I said at the time, answering his question by asking one of my own: “But can you tell me for sure that your members know exactly what a charter change will mean to them personally?” As expected, he countered somewhat belligerently, “Of course they know because we explained it to them.” It should be noted this all took place before NCUA tightened up its disclosure requirements. At the time I didn’t argue any further, but should have because what I feared was going to happen down the road has happened big time. Am I still the only one who thinks most members at credit unions trying to jump ship haven’t a clue regarding what they are voting on and worse, really don’t know any specifics regarding how such a move is going to hurt or help them when the bank shingle is hung out? Think about it. Credit union members aren’t all that different than all of us who have received complicated legal documents, say from a mutual insurance company, as a policyholder asking us to cast a vote on something we don’t understand, or don’t want to bother doing our homework on before voting. These people, and that includes me, should also get a Stupid Award. What usually happens is we either toss the voting packet aside deciding not to vote on something that appears too complex to bother with at the moment, or take a more common action. We vote yes figuring if the board and management of this organization want my support (which they clearly ask for), that’s all I really need to know. Why should I wade through all that boring information? After all, company officials are where they are to protect my interests as an owner of the company. They certainly wouldn’t propose anything not in the best interests of the company and its owners, would they? That’s the point. Credit union members asked to vote to change charters trust those making the proposal, even when it is manipulated. Like me and other stupid insurance company policyholders, they feel they are in good hands. They don’t ask, nor are they told, what the specific benefits will be to them personally except in the broadest of terms. Oh sure, they are given some gobblygook having to do with an alleged need for more capital to grow, better rates and service, etc., but nothing really specific. They are never told, for instance, that they will be able to get bigger loans at better rates in a more convenient way. Why not? Because that’s not what happens when a credit union switches to a bank charter. Members get nothing. The CEO and his or her staff and their boards on the other hand do quite well. This is not about the right of members to vote to become a bank. That’s a given. This is about members really and truly knowing what their vote will mean to the credit union and to themselves as an owner/member before they cast their ballots. Without knowing that, voting to convert is a stupid move. There is no polite way to say it. Hence the Stupid Award. If the big benefit went to members, I could understand the CEO of Community Credit Union in Texas seeming to be working full time to become the CEO of a small bank. The efforts made by him, his board, and others employed by or hired by the credit union to orchestrate a plan to abandon their own members for personal gain is astounding. The costs (prizes and other marketing initiatives, multiple law firms, multiple consultants, voting and possibly re-voting, related travel, lobbying at the state and national level, staff time dedicated to the cause, etc.) to members currently and down the road are embarrassingly high. (Fact: The failed Columbia conversion cost members over $1.2 million.) Community CU continues to act like NCUA doesn’t have any say so in the matter. At times the CU’s leaders even give the impression that the credit union can just thumb their collective noses at NCUA and go on their merry way towards becoming wealthy. Think I am exaggerating? Someone tell me what any one member, just one, has gained from his or her credit union becoming a bank. Make sure that what is cited is something above and beyond what they would get by remaining a credit union member rather than becoming a bank customer. The sad truth is, members voting yes, those voting no, and those not voting at all (the majority in every case) all got nothing. That’s why members voting yes deserve the Stupid Award. And if the NCUA Board bows to the enormous Community CU generated pressure being foisted on them, later there may be an award for them as well. Comments? Call 1-800-345-9936, Ext. 15, or Fax 561-683-8514, or E-mail [email protected]

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Peter Westerman


Credit Union Times

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