Oct. 9, 2006


  • Most of the CU-to-bank conversions to-date have provided no financial benefit to the original CU members. Of Viewpoint Bank's original CU membership, 1.5% purchased shares in the IPO. It's unclear precisely how the other 98.5% of the converted CUs members benefited. The CU-to-bank conversion phenomenon is likely to become more widespread, since very few CUs have an open goverance model. When was the last time your CU held a quarterly "Owner's Forum" meeting where members-at-large could ask questions to the Board or to the CEO? When was the last time your CU published minutes of the Board meeting on your CU's web site? When was the last time you notified members-at-large about proposed bylaw changes, and invited them to submit written comments or testimony before the Board voted? Credit union boards may not be required to adhere to "Public Open Meetings Act" requirements applicable to "democratically elected" public agencies such as your local sewer district, water district, or city council. However, most CUs have gone to the extreme opposite in that the only permissible "member participation", other than making deposits or borrowing, is to attend the once-a-year annual meeting....or to run for an elected Board or Supervisory seat. In this environment where the members-at-large are totally "shut out" of the information and feedback loop, it is easy for CU execs and directors to gradually become more comfortable with the idea of switching to a for-profit business model. I don't think the issue of CU-to-bank conversions is going to disappear unless there is more sunlight and transparency in CU governance. That includes more chances for members-at-large to become informed on issues, and for members-at-large to express their concerns and opinions to Boards.
    Ron Bensley, Jr.