Pewaukee, Wis. – The Wisconsin Credit Union League is asking Governor Scott Walker to veto provisions in the state budget bill that that would allow direct conversions of member-owned credit unions to shareholder-owned banks.
“The direct-conversion provisions subvert the interests of a credit union’s full membership to that of a few who intend to own and profit form a stockholder-owned – and not member-owned – business structure,” said Brett Thompson, President & CEO of The Wisconsin Credit Union League.
Thompson said many major deficiencies in the conversion language are stunning. The provisions adopted by the Legislature allow for the direct charter conversion of a credit union to stock-bank with little meaningful notice requirements, no protections of members’ voting rights and no requirement that any equity in the converted institution be returned to members.
Unless the Governor vetoes the provisions, he added, Wisconsin may ultimately see fewer credit unions available to serve average citizens who can’t get the financial help they need from profit-driven banks.
“This is a continuation of covert moves by the banking industry to kill the healthy not-for-profit competition. And when you consider that 2.2 million citizens – nearly 40 percent of our state’s population – rely on credit unions to grant the affordable small personal loans or business loans they need to make a go of it, where will they turn if the for-profit banks successfully eliminate the credit union alternative?” Thompson said.
The provision was slipped into the budget at the request of the Wisconsin Bankers Association. Neither credit unions nor The League were consulted, and no public debate or input by regulators was considered prior to the adoption of the language by the state’s Joint Finance Committee.
Credit unions are cooperative financial institutions that are owned by their members and do not have stockholders. Because they are not-for-profit, they return earnings to members in the form of more competitive rates of return on accounts, lower interest on loans, lower fees and improved services. Around 2.2 million Wisconsin residents belong to credit unions, of which nearly half are open to the local community. Find a credit union to join by visiting http://www.asmarterchoice.org. Read The League’s REAL Solutions 2010 Scorecard that explains how credit unions returned more than $203 million to their members in 2010 and served their communities regardless of profit.
