Effective Ways to Protect CUs from Conversions

In response to Mike Welch’s January 21st column (“Well Intended CU Board Actions Can Backfire”) relating to a credit union board’s actions implementing a stricter bylaw to prevent or at least “raise the bar” for any future conversion to a bank, I do not see a great deal of potential that their action could backfire on them. They obviously had some strong feelings about the issue, and wanted to express their intentions in a meaningful way. However, what a board can do, a board can undo. Most likely a future board that changed its mind could readily reverse the decision and have the bylaw changed back, as long as the action was consistent with then-current law and regulation. So while their action might have been effective in sending a strong message, I’m doubtful that it provided their credit union very meaningful actual protection against a future conversion. A more effective course of action to provide real protection, might be for credit unions (working through our national leagues) to provide input to the NCUA about the issue, to have current regulations governing conversions tightened. I would suggest the goal of such an effort should not be to prevent conversions, but rather to ensure that a credit union’s membership be adequately informed when considering such a critical issue, and that some reasonable percentage of the entire membership would have to vote in favor, in order to accomplish a conversion. Martin Breland President/CEO Tower FCU Laurel, Md.