A case of self-interest?
I noted with interest that First Basin Credit Union suspended the vote to convert to a mutual bank. I wonder what the member vote count was when the decision was made?
The mailing from First Basin about the suspension said people were telling falsehoods against the conversion such as members will lose their accounts. In fact, a person would not lose their account balance, but would lose their equity in the credit union. And that is in excess of $11 million.
I decided to explore this issue and found two excellent websites I would recommend to anyone interested in this matter: The first is www.membertrust.org, which is a nonprofit organization set up to provide information concerning conversions. Also, the opponents of the conversion of First Basin have put together a very informative website, www.savefirstbasin.com.
This process was allowed by legislation enacted in 1998. Since that time, only 30 out of more than 8,000 credit unions have converted to mutual banks with 80 percent of those then issuing stock and converting from a member-owned to a stock-owned bank.
A study of five of the converted credit unions found that upon conversion, the average stock and money acquired by each member of the board of directors was $742,000 and the average CEO made $1.9 million.
The vote suspension mailing from First Basin indicated the board was going to look at paying the members, upon conversion, some of the earnings they have recently made and call for a new vote. In other words, vote for conversion and get a check.
My math indicates a distribution of the equity in First Basin to its shareholders would be approximately $500 per member. This equity was built up over the years since 1965 when the credit union came into existence, and is the result of the members’ payment of interest and fees.
I am curious how close the First Basin board will come to this figure. Also, why would they now pay money for something that they tried to get for free?
I do not see how converting from a tax-exempt organization to a taxed for-profit organization can be in the best interest of the credit union members.
Having to pay taxes of 34 percent on net earnings, which last year were $1.54 million, losing ownership and equity interest in the credit union and the board and CEO likely making a tremendous amount of money off the conversion does not appear to me to be in the best interest of the credit union members.
By suspending the vote, it shows they were obviously losing. And then trying to sweeten the pot for votes, the board and CEO have shown they are aggressively trying to pass this matter.
They say it is for the good of the credit union and members. My mommy always told me that when someone is falling all over him or herself and telling you they are trying to help you, they are really probably trying to help themselves.
