SAN JOSE, Calif.-On Sept. 20, 2012 members of $1.6-billion Technology Credit Union resoundingly defeated a proposed charter change to a mutual savings bank-with 77% of those voting opposed to the conversion.
Now, with 2013 on hand, one of the leaders of the group that opposed the conversion believes the credit union community needs to be wary of similar moves in the future. There is currently one credit union attempting to convert to a bank; Massachusetts' HarborOne Credit Union.
Carlos Rodriguez told Credit Union Journal he still is proud of what he and a small group of Tech CU members achieved during the summer of 2012, but he also is saddened at the passing of opposition leader Robert Marinace just three weeks after the news was announced.
"Bob was the heart and soul of the movement to save the credit union," Rodriguez said. "He got it started and really deserves the credit for getting it as far as it did. He is the type of member that you don't see every day-one who remains vigilant and makes sure the credit union is acting in the best interest of its members."
Despite the victory, Rodriguez said the experience left him feeling a bit distanced from his credit union. He warned if Tech CU, or any other credit union, were to attempt a similar conversion in the future, "It is something the industry itself needs to monitor."
"What the credit union tried to do, others may try to do, and I see that as a threat to the industry as a whole," he declared. "If the credit union movement does not stand up for the democratic process as a whole, then they become a lot like banks. We cannot forget our roots, or else the differences credit unions present to consumers to distinguish themselves from banks become minimal. They have to remain democratically run institutions in which every member counts. Nothing is guaranteed."
Who Had Advantage?
In the aftermath of the overwhelming vote against the conversion by Tech CU members, management and board representatives lamented the "restrictions" NCUA placed on the communications that would be sent to members (see related story). Some analysts have gone so far to charge the dissident members had "advantages" over management in the fight, which Rodriguez asserted is "a poor conclusion."
Rodriguez noted management and the board produced an official package of documents to members supporting the vote for conversion, and when he, Marinace and other wished to respond point-by-point they had to spend $1,000 of their own money-$1,000 per message.
"The credit union may have been hampered by the NCUA, but it easily could have opened up dialogue on the website or participated in a dialogue in a public forum before it held the meeting to vote on the proposal," he said. "Even at the meeting management limited us to only a few minutes to speak. They said it was to give everyone a chance to speak, but this was an issue to change the entire nature of the institution. There needed to be a move toward coming to the truth, not just pushing one conclusion.
"Of course they are going to say it was unfair, they lost," Rodriguez continued. "Had they won, they would never have brought up not being able to communicate. It is disingenuous to say they were unable to communicate. They lost fair and square."
'A Tank of Sharks'
According to Rodriguez, who says he has been around the credit union community for a number of years, every CEO, board member or supervisory board member has a responsibility not only to their own credit union, but to the industry as a whole.
"If the only goal is to provide financial services, credit unions will be in a tank of sharks," he warned. "They need to keep an eye on the cooperative principles."
Rodriguez believes the potential for well-capitalized CUs to convert to banks is a temptation that will require a combined effort to ward off, including the implementation of increased regulations in case members are not as well organized at Tech CU's were.
"It was not just a 'member issue;' I can see other credit unions going this way and a small group of insiders walking away with healthy profits," he said. "If enough credit unions go this way, then all the dominoes start to fall. It is a systemic issue. The industry needs to make sure this change does not go through with a simple majority-make a conversion require a majority of all members."