Anti-consumer, anti-credit union provision slipped into state budget bill | submitted by Brett Thompson
The conversion of any financial institution from one type of charter to another is a complex matter that should require thoughtful consideration, appropriate information-sharing with stakeholders, and sufficient protections for the financial institution’s owners. A Wisconsin credit union whose management or board of directors wishes to convert to a bank already has two avenues by which it can bring its plan to its member-owners for their vote.
In spite of those facts, the Legislature’s Joint Finance Committee has voted to include language in the state budget bill that would make it easier for Wisconsin’s 2.2 million credit union members to be stripped of their equity in the cooperative financial institutions they own – by permitting direct conversion from a credit union to a bank charter. The vote on the budget amendment came after the provision was inserted into the bill without any public hearings, without any notice to credit unions, and without seeking any input from credit unions or their members.
The budget bill amendment for a new third avenue, slipped in surreptitiously, is unnecessary and bypasses all the considerations and owner protections provided by the two currently available avenues.
So who asked for the amendment to be covertly added to the budget bill? It’s no surprise that this anti-consumer provision was included at the request of the Wisconsin Bankers Association. They have made clear their intent to harm or eliminate not-for-profit credit unions and have no business determining public policy on behalf of Wisconsin credit union members.
The WBA represents dozens of bailed out, for-profit banks that still have more than a 90% market share for banking services in the state. Those banking giants that have snatched billions of TARP dollars out of taxpayers’ pockets are once again attacking credit unions in an effort to further reduce competition.
We would certainly support a legislative discussion regarding the conversion issue, but this is a major policy item that stands to negatively affect Wisconsin credit union members and should not be part of a state budget bill. If the WBA thinks it is good policy to make it easier for a credit union to become a bank, then it should have a stand-alone bill introduced, permitting all interested and affected parties a chance to speak up and be heard in an open discussion.
Attaching a non-budgetary amendment that affects the property and rights and interests of so many Wisconsin citizens to the budget bill – at the very last moment and under cover of darkness – is not the Wisconsin way.
Instead of concentrating on profits for a few shareholders like banks must do, credit unions are not-for-profit financial cooperatives. Last year alone, credit unions returned almost $203 million to their member-owners in Wisconsin in the form of lower rates on loans, higher rates paid on deposits, and fewer and lower fees.
The WBA is looking for a way to make it easier to latch onto the equity of credit union members and turn it into even bigger profits for a few bank shareholders, even if they have to sneak a provision into a budget bill to get it to happen.
Wisconsin’s credit unions call on Gov. Scott Walker to commit to vetoing the conversion provision when the budget bill gets to his desk. It’s the only fair thing to do for Wisconsin’s 2.2 million credit union owners.
Brett Thompson is president and CEO of The Wisconsin Credit Union League, a trade association for more than 220 of the state’s credit unions. For more information, visit www.theleague.coop.
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