The Coalition’s membership is comprised of credit unions. We also welcome – as supporters – former credit unions, credit union members, mutual thrifts, community banks and the state and national trade associations that represent their interests, as well as private corporations. The Executive Director of the Coalition is Lee Bettis, a former credit union and bank executive. Interested parties may contact Lee Bettis at 800-881-1698.

First and foremost, the Coalition was formed to serve the interests of credit unions -- particularly the ones which value the option to switch charters. There are more than 100 fast-growing credit unions which are discovering that the credit union charter and the NCUA’s regulatory regime are simply not keeping pace with the modern financial marketplace. The inability to raise capital in the traditional credit union structure often results in the institution having to curb growth and turn away new business opportunities. The Coalition supports the position that credit unions should have the right to examine alternative charter options for long-term growth and to pursue the one which best suits their business plan and the needs of their customer base.

There’s nothing wrong with the cooperative model. America has some very successful cooperative businesses, particularly in agriculture. In the financial area, in addition to credit unions, there are many successful mutual insurance companies and mutual thrift institutions. But these other industries have a choice in corporate structure and, increasingly, insurance companies, such as Prudential, and many thrift institutions have opted for demutualization. This is a business decision, not an ethical issue as some have tried to portray the debate. The cooperative model should not be an excuse for enshrining the status quo.

Credit unions converting to the thrift charter manage taxation like any other cost of doing business. The benefits of asset and profitability growth can often compensate for the cost attributed to income taxes. Hundreds of banks and thrift institutions pay taxes and have exemplary returns on assets and equity.

We believe the credit union, including its board and membership -- not regulators or industry trade associations -- should be the ones to determine which charter and corporate structure best suits the business plan of any particular institution and the needs of the community it serves. The U.S. economy is premised on freedom of choice and independence of action. It is indisputable that many former credit unions have been very successful as community-oriented banks and thrift institutions.

Unfortunately, the industry trade associations, working in conjunction with the NCUA, are seeking to take away this freedom of choice from individual credit unions to keep them confined to a business plan of “one size fits all.” Diane Casey-Landry, president of America’s Community Bankers, summed it up as follows: “The NCUA should take a lesson from the former Soviet Union. It should be eliminating obstacles to economic freedom, not erecting artificial barriers simply to protect their empire.”

The number of conversions completed or in process stands at no more than 30-40, out of approximately 7,800 credit unions. This is a small number in both absolute and relative terms. None of these institutions have encountered financial difficulties in their post-conversion years so as to warrant such an adverse reaction from the NCUA. The Coalition believes that the NCUA should concentrate on its safety and soundness mission and other things that are really important to the majority of credit unions.

One possibility is that a charter conversion requires the NCUA to return the reserves held by National Credit Union Share Insurance Fund (NCUSIF), the deposit insurance fund which it administers, and to forgo future insurance premium assessments. As additional and perhaps larger credit unions choose to change their charters, both the NCUSIF and NCUA’s operating revenue, which is derived in part from NCUSIF, might erode. This could explain why, after several years of reluctantly but even-handedly administering the 1998 statute, the NCUA is now trying to re-write federal law.

Boards and management pursuing the conversion option have a fiduciary responsibility to be open, transparent and comprehensive in the disclosures and other voting safeguards built into the conversion process. In fact, all previous conversions have far exceeded the statutory requirements for disclosure, which mandate notice to members. The new NCUA rules go well beyond that by requiring proxy materials to include speculation, for example, on whether or not a credit union converting to a mutual savings bank might subsequently demutualize by selling stock to the public. As pointed out by the American Bankers Association, this requirement is completely inconsistent with the rules of other federal regulators such as the Office of Thrift Supervision (OTS) which has over 30 years of experience with mutual-to-stock conversions.

This change also conflicts with an amendment to the 1998 legislation which specifically limited the role of the NCUA in a proposed charter conversion to receiving notification of intent to convert and verifying the voting process. No authority was given to review and regulate the specific content of the conversion material, which is precisely the objective of all new NCUA regulations since early 2004.

The Committee Report on the 1998 legislation also stated that the NCUA’s rules for charter conversions are to be “no more or no less restrictive than those rules that apply to charter conversions by other financial institutions.” The FDIC, the OTS and the Comptroller of the Currency do not direct how their regulated entities are to obtain shareholder approval for a charter conversion. In fact, for all other types of financial institutions, it is the successor agency that regulates conversion, thereby removing regulatory conflicts of interest.