California law and regulation are silent on the topic and Technology CU needed a demonstration of authority to convert from California DFI for its application, according to sources familiar with the situation.

Sayre-Peterson's opinion would have provided the needed justification, the sources said.

“The California Credit Union Law does not include an explicit provision authorizing such

a conversion,” Sayre-Peterson's unidentified correspondent wrote in the April 27 letter. “However, as explained below, it does include authority for a California credit union to engage in a purchase and assumption transaction with a federal mutual savings bank by which it would transfer all (or substantially all) of its assets and liabilities to the federal mutual savings bank (P&A),” the letter read.

“The federal mutual savings bank would assume the share accounts of the California credit union members and the loans made by the California credit union, as well as the other assets and liabilities of the credit union.

“The deposit accounts of the federal mutual savings bank would be insured by the FDIC. Upon consummation of the P&A, the former members of the credit union would have voting rights in the federal mutual savings bank.

“Thus, in the case of a P&A with a de novo shell federal mutual savings bank established to facilitate the transaction, the result would be functionally the same as if a direct conversion to a federal mutual savings bank had occurred.”

In his response letter, Sayre-Peterson said the DFI agreed with that reasoning. “It is our opinion that a California state-chartered credit union may convert to a federal mutual savings bank in the manner described in your letter,” he wrote.

Calls to DFI and to Technology CU for comment have not been returned.