HONG KONG — The U.S. policy on conversions of nonprofit credit unions to for profit banks has drawn a mix of bewilderment and outrage from world credit union leaders attending this year's World Credit Union Conference.
Similar conversions, called demutualizations, are not unknown in other parts of the world but the US may the only country which does not mandate that the equity of the closing credit union be distributed to the CU's members as part of the demutualization process.
"That's bloody outrageous," blurted Phylip Doughty, CEO of MECU, a large credit union in Australia, after CUNA Chairman Tom Dorety explained to conference attendees the U.S. policy of transferring the equity of the closing credit union to the new corporation and offering CU members only the opportunity to buy shares of it.
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"You're telling me that these buggers keep the earnings and then make CU members buy back what they already own," he said, incredulously to Dorety. "Don't ever complain to me about regulation, mate. Your lot clearly don't have any regulation at all!"
Doughty had explained that in Australia, a credit union which demutualizes must return the equity as shares back to all the members who often benefit additionally if further reorganizations increase the value of their shares.
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