Inquiring Minds Want to Know—Members’ Questions About Conversions

Online forums provide a window on members’ perceptions of credit union conversion proposals.


Member comments and questions posted on blogs and websites show how much remains to be answered about conversion proposals. Several sites have been established by members opposed to conversion in order to provide a means for the membership to communicate effectively. Conversions have been a more public topic as well--some of the most pointed commentary was found on a general local business blog maintained by the business editor of a newspaper in a community of a large credit union considering conversion.

These sites should not be dismissed as echo chambers filled with like-minded members clinging to the status quo. For the most part, the questions and comments raised online show a sincere interest in obtaining more information and debating the issues. Perceptions of stonewalling and lack of transparency on the part of boards and management generate discussion that is equally if not more passionate than the topic of members’ ownership of capital.

We’ve gathered the following excerpts from several sites to illustrate the tenor of online conversion discussions. As expected, members have raised valid questions about the logic, necessity and process of conversion proposals:

  • “If nothing is changing, why go through the hassle and expense?”
  • “What new products or services is [the credit union] referring to that it does not currently provide or cannot otherwise provide without changing its charter to a savings bank?”
  • “If becoming a bank is such a great idea, why is [the credit union] offering $15,000 in cash prizes to assure the change occurs?”
  • “If the board is concerned about providing branches in [a nearby community], why hasn’t it considered joining the shared branch organizations that service this area?”
  • “What type of survey or input from the overall membership did the board obtain in determining that the members desired business loans? . . . Give that such a small percentage of the membership has obtained business loans, how can it properly be said that the interests of the overall membership are being served by making such loans?”
  • “[Why won’t the board] not make public, or disclose to members upon request, those board minutes that discuss the conversion plan? They will tell you that they don’t disclose board minutes because they discuss members’ personal financial affairs. Then ask them why they won’t disclose redacted minutes to isolate just the discussions about the conversion.”

At the same time, the blogs also contain comments from members who support conversion:

  • “I'm wondering what have you actually read or heard from the management that makes these changes so bad? . . . Commercial banking (while very different than personal banking) is a lucrative business for banks. If they can pull off commercial banking it seems to me that it may actually improve the performance of the bank which could improve personal lines products. Why the loyalty to the institution?”
  • "If they convert to a mutual savings bank, they can grow faster because they can serve more people and they can invest in a broader range of investments which can improve their investment return."

And some members propose alternatives to outright conversion:

  • “Maybe 80% of retained earnings can be paid out equally to all members prior to conversion. No stock grants and options to the Board and Management allowed. Bind the new Savings Bank to remain a mutual holding for a minimum of 30 years after conversion! Will they agree to these provisions?”
  • “Is it possible to sell the credit union to an existing bank rather than convert to one? If [the credit union] wants to be a bank and offer business services, and they don't have these services now, how do they expect to be better than an experienced bank? Why not vote to sell the credit union to an experienced bank, and give us our share?”

Finally, a poignant comment from a credit union member:

  • “It's true that they've been acting more and more like a big bank (just look at the slogan in the graphic!!) but couldn't they at least keep pretending to be a credit union?”

These comments and questions show the seriousness with which some members consider their responsibilities as members of a cooperative. Creating trust by letting the daylight shine on a well-conceived and –supported conversion proposal will benefit not only the members, but a successor organization as well.

This topic is also the focus of October’s Callahan Report, a monthly publication that focuses on strategic concepts, thought-provoking ideas, and trends in the credit union industry.




Nov. 13, 2006


  • This sampling of comments indicates that communication about the conversion process is severely lacking. When members are still unclear about the motivations behind the conversion and the short and long-term implications, then how can they be expected to make an informed decision?
  • Your article is an effort by the disciples of the status quo to give credibility to a handful of dissidents clinging to the past and/or sponsored by anti-conversion crusaders. The vast majority of members do not care about the myth of member ownership. They want good service and convenience which, for many, can more easily be provided with a new charter. This is a fact and the simple reality of marketplace economics. Your company should be more honest in acknowledging the liabilities of the credit union charter and the hopelessness of regulatory relief otherwise its usefulness will quickly diminish in the minds of progressive institutions.
  • I agree with the comment above. Members often don't understand the credit union difference, so it stands to reason that many of them also have no idea that personal greed is the main motivating factor involved in credit union-to-bank conversions. The consumer's well-being is a non-factor once that decision has been reached by the officials.