Credit Union Times
August 31, 2005
Chicago – The Woodstock Institute, an occasional critic of how well
credit unions serve the low-income, has sent at aletter to the NCUA
expressing concern about the phenomenon of credit unions changing their
charters to those of mutual banks.
“Woodstock fully supports consumer choice,” wrote Woodstock senior vice
president Marva Williams in the August 23 letter. “But in our opinion
credit union conversions to mutual savings banks may be to the
detriment of consumers and communities. Our years of research on the
comparative suitability of different financial products for
lower-income families show that credit unions have significant
advantages over other regulated financial institutions,” the letter
Williams noted that Woodstock still has concerns that credit unions
mayh not be serving low-income members as well as they could, but
pointed out that credit unions engage in more financial literacy
education and offer more affordable products and loans than banks.
She also cited a recent Woodstock study which documented how credit
union-issued credit cards have fewer fees, lower fees, lower default
rates and much clearer terms and conditions.
In conditions where credit unions are considering conversions, Williams
wrote that the NCUA should push the credit union to show that such a
move will bring real benefits to CU members and should even allow a
community to weigh in onhow it would feel about a conversion.
“In the event that a conversion is being considered, the members of
credit unions should be fully informed on how it will impact their
voting rights and access to affordable services and loan products,”
Williams wrote. “Further, credit union board of directors and senior
management should provide objective information on the advantages and
disadvantages of a conversion as well as any financial returns to them.
The NCUA should ensure that the conversion offers tangible benefits for
the members fo the credit union and that any retained earnings are
returned to the members. In addition, a suitable public comment period
as well as shareholder meetings should be insituted prior to the
distribution of ballots.”
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