So much for being in the credit union prediction business. Even before the New Year's Eve hats and horns were put away, Credit Union Times' eagle eyed editorial staff learned that another large credit union had decided to begin the new year by going down the same path that recent wannabe banks found to be such a perilous journey last year. As the year began, Community Credit Union, a $1.4 billion CU headquartered in Plano, Texas, announced with no fanfare that it was already seeking all the necessary regulatory approvals to convert to a bank charter. After the failed conversion efforts of Columbia and Lake Michigan credit unions last year, I fearlessly predicted that no large credit union would seek to convert to a bank charter in 2005. It didn't take long to prove me wrong. A Community Credit Union attempted charter switch will be different for a number of reasons. In Texas changing charters only takes a simple majority of those members voting. Theoretically, a handful of Community's 221,000 members could turn the credit union into a bank. For Lake Michigan CU to convert required a two-thirds majority. With lots of spin, aggressive marketing, and an unlimited budget, the credit union's leadership might have an easier time convincing gullible members that being a bank customer will be so great for them that they should come to a meeting to vote and to vote yes. Maybe some big door prizes would also help? Another difference is the personalities involved. In the most recent charter change attempt involving billion dollar CUs, the involved CU CEO was unknown. Ever hear of Sandy Jelinski? She is Lake Michigan CU's current CEO. Ever hear of Gary Base? Everyone has heard of Base and has an opinion on him. He's known to be super aggressive, very smart, plugged in, an innovator, and successful as a CU CEO at a number of CUs in his career. He is also known for his giant ego. If any one credit union CEO can pull off a conversion to a bank charter it is Base. The man does his homework, knows how the game is played, and once he sets his mind on something, he will pull out all the stops to accomplish it. Most telling is the fact that upon hearing the news, virtually every credit union person said basically the same thing: “I'm not at all surprised; it was just a matter of time. Base already runs his credit union like a bank.” Some, like American Airlines FCU CEO John Tippetts, have openly suggested that Base and his ilk would be doing the “credit union movement” a favor by making official what in his mind is already obvious, namely, that Base is a banker running a small bank disguised as a large credit union. Tippetts may have been referring to some of the larger and more visible business lending activities of Base's CU. Visiting family in Community's backyard recently, we watched a small fry hockey game in a multimillion dollar neighborhood sports facility in Plano, Texas. Community Credit Union's name and logo were prominent on a sign in front indicating who financed it and on the sideboard of the hockey rink itself. Still another difference, Community CU really has been fighting the oft-cited capital problem (currently 7.59). At a meeting a couple of years ago Base was lamenting the fact that capital requirements had become a major impediment to his growth plans. As members were turning to credit unions in their flight to safety, Base told me he was actually trying to stem the flood of money pouring in. One other indication of what makes this CEO tick is the fact that he managed to get appointed to the Texas Credit Union Commission, a volunteer position, and then end up as chairman. Although on the surface, wanting to manage a bank and at the same time chair a political body of nine industry and public representatives charged with reviewing the state's credit union laws and regulations and advising the state's regulator, appears to be an obvious conflict of interest, Base has already indicated he has no intention of resigning his post. Although he describes himself as “pro-credit union,” others have said a better description might be “pro-Base.” Other than that, this conversion attempt is like all the others, both those that succeeded and those that failed. Those behind the attempted charter switch of Community Credit Union are using the same conversion specialist consultant, the same conversion experienced law firm, and the same line of malarkey to members that giving up credit union membership/ownership is going to be a great thing for them both in the long run and in the short term. It baffles me how so many members can't see through this blatant manipulation. As one ex-banker CU CEO put it: “I can tell you that you can't serve your members better by turning them into customers.” In not a single conversion attempt has any momentum whatsoever ever come from the membership. In every case, it has been the CEO and board behind the effort. What does that tell you? Will Community Credit Union end the new year as a bank? It depends. On the “yes” side, Base and his crew will do everything right from dotting every required membership disclosure “I” and crossing every regulatory agency “T'. Their efforts to persuade members to make the change will be thorough and convincing. On the “no” side, as it did in Michigan, the Texas League could become a major obstacle. Although not required, so could use of a mail ballot. As could finding, educating, and supporting credit union members who can see through the smoke and mirrors and mount a campaign to defeat the proposal and dump some CU board members in the process. The second part of my charter change prediction was that even if a CU did attempt to convert, it wouldn't succeed. I stand by that. Comments? Call 1-800-345-9936, Ext. 15, or Fax 561-683-8514, or E-mail [email protected].