WASHINGTON (10/4/11)--Following Monday’s announcement that Technology CU, of San Jose, Calif., will seek members’ approval to convert to a mutual savings bank charter, Credit Union National Association (CUNA) President/CEO Bill Cheney said “CUNA continues to believe that the credit union charter remains the best option for serving the interests of consumers.” The value of the credit union charter, Cheney said, was demonstrated over the last several days when Bank of America’s announcement of a $5 monthly debit card fee ”was followed by a resounding and sharp outcry from across the nation, by consumers and the news media alike, that credit union membership is the natural haven from such high fees typically charged by banks.” “As in this instance it is difficult to imagine how converting from a credit union to a bank could really benefit consumers,” Cheney said. Studies have shown credit unions that converted to banks in the past soon begin pricing their services like banks. “Ultimately, of course, the decision to convert has to be made by members of the credit union who own the institution. They can only make that decision based on all of the facts, provided with complete transparency,” the CUNA CEO stated. He urged the credit union to make every effort to completely and transparently inform its members of the pros and cons of “this critical decision.” California Credit Union League President/CEO Diana Dykstra concurred, saying members must be educated on the benefits of being part of a credit union as opposed to a bank, so they are fully informed when their financial institution considers a change of charter. She noted that some of those benefits include:
* Credit union members are owners and elect their board on democratic principle: one member, one vote. In contrast, a stock-owned company like a bank will maximize gain for stockholders, not members; * According to various studies and reports, credit unions typically offer better loan rates than banks; and * Research indicates that consumers nationwide save $6.8 billion a year by using a credit union over a bank. In California, Dykstra noted, that savings amounts to about $930 million, or $183 per member household.
Technology CU was chartered in 1960, serves 73,000 members, and holds more than $1.5 billion in assets. It said in a notice to members that the charter conversion would allow the institution to “significantly expand its commercial lending business” and diversify its loan portfolio “by increasing secured commercial and industrial lending to small and mid-size businesses.” The credit union said member/customer access to the institution’s branches, ATMs, checking, direct deposits and withdrawals, and other standard services would also be unchanged. The credit union will accept comments from members until Oct. 29, and Technology CU’s board of directors said it would consider the charter change on Nov. 2.