Think Tank Analyst Suggests CU Members Should be Paid In Conversions

WASHINGTON – Alex Pollock, a fellow at the conservative leaning American Enterprise Institute, a Washington D.C. think tank, has suggested that credit union members whose credit unions wish to convert to mutual or stock banks ought to be compensated in some way for the ownership of the CU they are giving up. Writing in the July 7 American Banker, Pollock noted that CU membership currently does not have a generally accepted market value attached to it and that paying CU members for their ownership of the institution might be one way of resolving some objections to CU conversions. He cited the recently contemplated merger between Nationwide Bank and the $587 million Nationwide FCU as an example. “Any credit union wishing to have a smoother conversion to a savings bank charter should find a way-as Nationwide Bank has in a different version of the transition-to make the members’ `ownership’ have economic value,” Pollock wrote. “This would be some kind of effective charter conversion premium, perhaps through a special dividend or the issuance of an appropriately designed security.”