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CUNA, League On Bank Charter Vote: Members' Interests Matter Most
BROCKTON, Mass. (3/19/13)--Members' interests matter most, said the Credit Union National Association and the Massachusetts Credit Union League upon learning Monday that members of Brockton, Mass.-based HarborOne CU had approved converting the credit union into a state-chartered mutual cooperative bank.

"CUNA strongly believes that the best financial services model for consumers is the credit union model, which offers better rates, lower and fewer fees, and superior personal service," said CUNA Executive Vice President of Strategic Communications and Engagement Paul Gentile. "All of that stems from the basic credit union structure of being not-for-profit, cooperatively owned and member-directed."

CUNA policy with regard to credit union conversion to a bank is that the decision is one for the membership to make since credit unions are cooperatively owned by their members, said Gentile. "It is important, however, for the members to be fully informed about what's being proposed and its implications prior to the conversion."

Roughly 62% of voting members of the $1.9 billion asset credit union cast ballots in favor of the change. The credit union has 139,078 members. Of that, more than 22.433--or 21% of eligible voters actually voted either by mailing in ballots or voting at a special member meeting on March 11 (Fort Mills Times and The Enterprise March 18).

While it is the prerogative of the membership to determine the fate of their credit union, members are best-served by a credit union operating with a credit union charter, the Massachusetts league noted Monday.

"Any charter conversion has to be approached from the viewpoint of the credit union's members--owners of the credit union," said league President Daniel F. Egan Jr.  "Unfortunately, in this case, the members seemed to have accepted the argument that the operational advantages of the bank charter outweighed their rights and privileges as credit union members."

The league said it strongly believes that the member-owner, not-for-profit credit union charters is the charter of choice. "Credit unions now have 2.5 million members in Massachusetts and 95 million members nationwide because they put the interests of the consumers first," said Egan.

"Under current laws and regulations, credit unions operate under more restrictions than banks," Egan said. "In particular, credit unions lack access to alternate sources of capital, face higher net worth requirements, are more restricted in business lending and serve a defined field of membership." 

"These issues are real and indicative of the challenges that credit unions face as they seek to meet the modern needs of today's consumers. It is vitally important that legislators and regulators pay heed to these challenges and work to adopt new laws and regulations that keep the credit union charter viable," Egan added.

HarborOne , the largest state-chartered credit union in New England, said it applied for the change after it had to turn down mortgage lending business because its charter was limited to four counties and prevented it from growing in the Boston market. It also said it was nearing its member business lending cap.

The National Credit Union Administration said the credit union had the alternative to petition the state to widen its geographic boundaries and that it was not near its MBL cap.

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