CHARLOTTE, N.C. – A panel made up of banking executives, attorneys, regulators and one credit union CEO struggled recently to better understand the issue of credit union-to-bank charter conversions but, at the end of 90 minutes of discussion, likely left the room with no more answers than they had in the beginning. The panel, Charter Choice? Issues Surrounding Credit Union Conversions, was the last of five panels which took place across a day and a half meeting of the University of North Carolina Law School's Banking Institute. The March 31 event featured Diane Casey-Landry, CEO of America's Community Bankers; John Ryan, regional director of the Office of Thrift Supervision's Southeast Region; and Tom Dorety, CEO of the more than $5 billion Suncoast Schools FCU, headquartered in Tampa, Florida. Also participating in the panel were Michael Briggs, a lawyer with the Washington D.C. law firm of Gordon, Feinblatt, Rothman, Hoffberger and Hollander and former chief legal counsel to the ACB, and Gerard Comizio, a lawyer with Thacher, Proffitt and Wood, who has had experience with credit union-to-bank charter conversions. Since the event had not been organized as a debate but as more of a discussion relating to conversions, much of the panel appeared genuinely confused about why these conversions raise the issues they do and the ire of the credit union industry as a whole. This confusion, for example, prevented many of the panel from understanding why the NCUA would believe it had a duty to protect the interest of credit union members confronted with a possible conversion – or why credit unions couldn't join the rest of the banking world in understanding credit union conversions to be just another charter conversion, much the same as when a mutual bank converts to stock ownership or when a stock bank becomes a mutual again. "Whenever we had a mutual bank that converted to another charter, usually to demutualize, we would always go and talk to the bank and try to understand why they were doing it," Ryan said, recalling his days with the OTS when such conversions were common. "But we would never seek to block them from doing it." Dorety, as the only credit union CEO on the panel, and likely in the room, countered that there is something significantly different in taking a credit union, an institution which had been organized as a nonprofit institution owned by their members to be banks. Comizio came closest to understanding, noting that it was easy to discount or misunderstand how painful a credit union conversion could be on the credit union industry. "For sure a credit union-to-bank charter conversion is traumatic for the credit union industry as a whole," Comizio said, "when a relatively small industry sees an institution abandon a charter it has held for decades in favor of another, that is going to cause a lot of trauma." Casey-Landry mostly reiterated the ACB's position that NCUA's positions on charter conversions are motivated more by a desire to protect turf and budget than a desire to protect members' rights and she cast the matter squarely as a question of choice, suggesting that "at some point" NCUA and the credit union industry was going to realize that credit union members have a right to choose whatever charter they want. She also suggested that such conversions should be viewed more as a sign of a maturing industry than as a betrayal of an institution's history. Casey-Landry pointed out that while the ACB had its roots in the mutual savings industry, industry growth and change had led many of its members away from mutuality and led the ACB to change as well. Such growth and change is normal and should not be fought, she suggested. "We welcome credit unions wanting to take the next step as they grow up," Casey-Landry said, building on her comments previously that the credit union industry was going to have to wrestle with the idea that, as institutions grow up, they would make decisions to leave their original charter. Dorety, appearing frustrated with the panel not grappling with the issue clearly, said that insider enrichment is one of the biggest problems with conversions. He said Suncoast had consulted with a firm, which handles conversions and was told that it could raise $850 million in a stock conversion if it became a bank. In personal terms, Dorety said such a conversion and stock issuance would bring him $35 million, after five years. Dorety said that the figures assumed stock purchases and compensation plans common to the industry and conservative stock appreciation. "If you were to start a public company and invest your own money, you would have every right to do with that money whatever you wanted," Dorety explained. "But if you are taking money which credit union members have built up over years and you are getting that money merely by getting that credit union to flip, there is just something wrong with that." [email protected]