I read the recent letter to the editor by Diane Casey-Landry (CU Times, April 26, 2006) and just have to say that her comments, in response to the opinion column by Suncoast Schools FCU CEO Tom Dorety (CU Times, April 19, 2006), are remarkable both in what she says and what she omits. Clearly she is desperate to validate what good judgment would tell any independent person is wrong.
Mutual savings banks are in fact as old as our nation. But despite the ease of finding relatively large mutual savings banks, the truth is that most of them have converted to other charters. Yes they thrive on self-determination and that determination for most of them was to change to another charter. The point she omits is that a mutual savings bank charter is becoming a rare charter and is not likely to be a long-term charter for those credit unions that convert.
The United States does have the strongest financial service system in the world. I think the system is strong because of diversity as Ms. Casey-Landry states. Credit unions have been one of the strongest components of that system. When the savings and loan associations disintegrated because of mismanagement and greed, taxpayers footed the bill. When credit unions capitalized their insurance fund they funded it themselves. The changes Ms. Casey-Landry endorses all have the effect of decreasing the diversity in the financial system. She knows banks are not converting to credit unions.
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Yes, financial institutions should be free to change from one charter to another. But in a credit union, that choice must be voted on by the members and those members must be given honest information with which they can consider the merits. It appears that often members do not get the information they need to make an informed choice.
NCUA in its role as regulator inserted itself in the conversion process not to prevent change but to protect the members' rights.
I find it strange that Ms. Casey-Landry describes the conversion process as a natural one. There is nothing natural about a credit union converting to a bank. It is not natural for members to ask for fewer rights. It is natural for members to fight to retain the tax-exempt status of their credit union, but it is not natural for them to vote to give away that tax-exemption to become a mutual savings bank. It is not natural for the members to give up their credit union so that a few can enrich themselves in the process. Maybe it is natural for some to assume that the ends justify the means.
Why does NCUA assume that the only reason for charter change is greed? Well maybe because all of the facts point to that conclusion. Credit union members are never the ones to initiate a conversion to a mutual savings bank charter. The board and management, who have great potential for financial gain, initiate them. Credit Union capital was raised over many years through many generations of members. No one in a credit union has ownership rights to that capital except in liquidation. Yet through the process of conversion, more and more control of the capital and the organization pass to the Board and Management that initiate the conversion. That's why greed comes into question when conversions are proposed.
I doubt that the America's Community Bankers or Ms. Casey-Landry's job is to mislead the public. But her letter to the editor is misleading. It places blame on NCUA and everyone but the board and management of the converting credit union. Maybe that is because they don't support what is best for our members. The only certainty is that Ms. Casey-Landry supports what's best for America's Community Bankers.
Henry Wirz CEO SAFE CU North Highlands, Calif.
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