Madison, Wis. – The Wisconsin Credit Union League expressed disappointment today that Governor Scott Walker failed to use his line-item veto to eliminate non-budgetary financial institution chartering policy that permits direct conversion of a member-owned credit union into a stockholder-owned bank. The policy, slipped into the 1,500 page, $66 billion budget bill by the Joint Finance Committee and approved by the Legislature, makes it easier for Wisconsin’s 2.2 million credit union members to be stripped of their equity in the cooperative financial institutions they own. It was added to the budget bill at the last minute without notice to any credit union, any credit union member, or any credit union trade association, and without a public hearing.
“We sincerely hoped Governor Walker would have heeded the recommendation of nearly 1,000 credit union advocates, dozens of cooperative businesses and the credit unions’ trade association, all of whom requested a veto,” said League President and CEO Brett A. Thompson. “Controversial and complex financial institution chartering policy clearly does not belong in a bill related to the state’s finances.”
Governor Walker signed policy into law that can easily been abused by a small group of individuals at the expense of the majority of credit union member-owners.
“It’s discouraging the Legislature and Governor didn’t provide an opportunity for the consumers who own their credit unions to share their perspectives on the matters directly related to them,” said Thompson. “With this new law, the legislature has made it easier for a few individuals to latch onto the equity of credit union members and turn it into even bigger profits for a few bank shareholders.”
According to Thompson, any policy to allow for the conversion of a state-chartered, not for profit, member-owned credit union to a shareholder-owned, stock bank should include a transparent, neutral and prescriptive member notification process and a meaningful voting threshold. These are necessary to ensure the membership truly understands the consequences of the conversion vote and all have made an informed judgment about the future of the institution they currently own. “Unfortunately, the policy the Governor left in the budget bill fails on all counts,” finished Thompson.
The anti-credit union provision was included in the budget bill at the request of the Wisconsin Bankers Association, which has made clear its goal of eliminating not-for-profit credit unions and the competition they represent. Last year, Wisconsin credit unions returned almost $203 million dollars to their member-owners in the form of lower rates on loans, higher rates paid on deposits, and fewer and lower fees.
