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CU to divest auto dealership in Wisconsin
RACINE, Wis. (11/4/08)—Educators CU will divest its auto dealership, under an agreement with its state regulator, the Wisconsin Office of Credit Unions (OCU), regarding the credit union’s ability to own and operate the dealership. The $1.018 billion asset, Racine, Wis.-based credit union established a retail automobile dealership to provide car-buying resources and used-car sales to its members and consumers in 2002. The Wisconsin Automobile and Truck Association filed a complaint with the OCU, saying that the credit union charter does not allow credit unions to offer this service, the credit union said. Educators CU believes the complaint was filed to prevent competition--each year more than 700 individuals purchase high-quality used vehicles, the credit union said. The OCU initially ruled that the State of Wisconsin Credit Union Statutes, Chapter 186, allows credit unions to own only car leasing services under the agreement, not retail car sales. The credit union appealed this ruling. “We have 18 months to have the law clarified or divest to a third-party,” Jim Henderson, Educators senior vice president, told News Now. “I believe we may have been successful in our appeal, but we do not want to spend any more credit union (member) dollars on legal fees to fight this ruling,” Eugene Szymczak, Educators president, said in a press release. “This settlement will allow us 18 months to get the law clarified to clearly allow this service or to transfer this business to a third party so that this consumer-friendly service can continue.” “We have literally saved members millions of dollars on the purchase and financing of their vehicles,” Szymczak continued. “In addition to pursuing clarity to the law, we will evaluate alternatives to sell the retail car business to a potential business partner who can provide value to members. “However, that business partner would need to operate under our core values of honesty, integrity, respect, fairness and service excellence. Anything less will not be acceptable,” he added. The credit union owns Educators Auto & Lease, a division of ECU Financial Services Inc. It provides used-car sales, new- and used-car leases, and new-car referral services. Its used-car inventory includes many late-model, low-mileage vehicles. All used cars include a three-day return policy and a 60-Day safety net, which covers the cost of most mechanical repairs for two full months after the purchase, the credit union said.


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