The board has recommended the membership vote to approve the merger and the CU explained that they had reached their decision after convening a special committee of board members who were no longer employed by Nationwide. These "disinterested" directors could, the CU believed, bring more independence to the decision making process.

Credit union leaders who have generally opposed the mutual banks expressed degrees of approval of the merger-if not for the merger itself then certainly for the way that Nationwide was going about it.

"I think this illustrates, by way of example, the thievery that is going on in these credit union-to-bank conversions," said Jim Blaine, CEO of the $13 billion State Employees' Credit Union, headquartered in Raleigh, North Carolina and a longtime opponent of conversions.

"I mean here is Nationwide, a widely respected pillar of American finance, recognizing that credit union members will need a premium in order to vote to liquidate their credit union," Blaine said. "They understand that the credit union's members own that institution and if they are to sell it to a bank they deserve to be paid for it. The members of Lafayette could only hope their own leadership had reached the same conclusion," Blaine added, referring to the $331 million Lafayette FCU, headquartered in Kensington, Maryland, the latest CU to seek to change its charter to that of a mutual bank. (See related story page 1.)

And the payment is only the first of several elements of the deal that Blaine and other conversion critics are finding to praise.

They also like the fact that unlike virtually all other conversions, Nationwide members find out about the merger far in advance of when the disclosure packet or ballot arrives in the mail. Instead, NFCU's members are being notified ahead of time, before either the bank has applied to the Office of Thrift Supervision to approve the merger or the credit union has submitted its disclosure documents to NCUA for approval.

They also noted that none of the CU's executives or board members are being paid or otherwise rewarded for this merger. Unlike what has often happened when CUs have converted their charters to banks and then gone on to issue stock, no insiders will take advantage of the situation to make a good deal more money on the offering than their CU's average members. Instead, the employees of the CU will continue their jobs with the bank, serving the bank's customers who were formerly CU members.

The only exception to this rule may be longtime CEO Edwards. "Frankly, I am not sure what my role might be or even that I will have one," Edwards said. "There is simply so much to do and my priorities have been our members first and second our own employees."

Blaine also pointed out that this CU's leadership is not seeking to duck its members' questions or hide what it believes they should do. The CU's leadership is forthright about what it seeks to do, and why, and that brings a level of transparency to the process that conversions have lacked, said Blaine. Why Do It?

When asked why the board decided to take this course, Edwards reiterated that it believed the merger was in members' best interests, but it is also in Nationwide's interests too.

Among its other changes, The Graham-Leach-Bliley law allowed insurance companies to charter and own banks, leading Nationwide to decide to use an existing $100 million trust to start its own bank. Once that decision was made, sources said, it was likely inevitable that the CU, which has Nationwide as its only sponsor, would come under a lot of pressure to cede to the bank.

"I mean, it's just not going to happen that a company is going to allow its own employees to be in competition with one of its own subsidiaries," said one source familiar with the situation.

In addition, buying the CU gives the brand new bank, which was only chartered in April and which has not yet really opened in a formal way, 44,000 customers virtually overnight, as well as an array of business and bank services to offer.

But Erick Hardgrove, spokesman for the bank, said that Nationwide was planning to go forward with its bank plan whether or not the CU's members approved the conversion. "It just seemed to us that this was a win-win for everybody," Hardgrove said. "And we hope that the credit union members agree with us." [email protected]