The National Center for Member Trust Working for CU Members' Right to Know

Credit Union Times   October 18, 2006
By David Morrison

RALEIGH, N.C. — The National Center for Member Trust, the nonprofit organization founded by three noted credit union leaders to provide credit union members faced with potential credit union conversions with resources on those conversions, has continued to get organized.

Bucky Sebastian, CEO of the $2.1 billion GTE FCU; Jim Blaine, CEO of the $13 billion State Employees' Credit Union of N.C.; and Randy Chambers, vice president of the $237 million Self-Help Credit Union founded the organization in the spring of 2005.

So far the organization has continued to raise money from the 70-plus supporters that include individuals, credit unions, and credit union leagues. The group has also disbursed some funds, including $25,000 to the DFCU Owners United members group, which objected to that $1.1 billion credit union's attempt to convert in 2005.

That disbursement and the support the group offers to CU members has drawn the fire of conversion advocates and supporters who have charged it with having a negative impact on the issue and with bringing outsiders into a process that should be between the credit union and its members.

But Chambers scoffed at the contention that anyone who helps members balance the scale of what is being said about a proposed conversion has done members anything but a service.

"The Center wouldn't need to exist if credit unions which proposed conversions sent really balanced disclosures to their members about it," said Chambers. "If disclosures laid out the pros and cons of being a bank as well as the pros and cons of remaining a credit union and urged members to carefully weigh the decision, I believe there wouldn't be a need for members to take on the issue as much as they have." Chambers pointed out that the $25,000 the National Center gave the DFCU members group to advertise questions about the conversion and pay for legal research "was a drop in the bucket" compared to the money the CU spent on advertising and promoting the conversion. Chambers' point was that individual members who oppose the conversions could never have as many resources to bring to the conversion discussion and voting, as the CU possesses.

Recent conversion announcements would tend to bear that out. The $1.2 billion Think Federal Credit Union has told members, for example, that it will spend $58,000 on member education, presumably in favor of the conversion and it's extremely unlikely a group of individual members could gather a similar amount of money quickly.

Blaine said that the Center had continued to raise funds, but that it would not release the total raised until after the end of the year when the group would have to file standard reporting forms as a nonprofit. He said that the group had received widespread support from a variety of different types of parties and that not all the support the group received came in the form of cash on the barrelhead. "We have had roughly three different types of reaction" to the group's first fundraising letter in the spring, Blaine said. There are those who are waiting to see what the Center will do with the money, those who have pledged support in their next budget cycle and finally those who will support the group, but will unveil that support in response to a specific need in the future, said Blaine. "The point is that whatever figure we would give would only represent a small part of the support we are getting from all parts of the credit union industry," Blaine said.

Blaine also emphasized that the National Center only responded to calls from member groups at CUs which are seeking to convert and did not necessarily have as its goal preventing any credit union from converting.

"What we are looking to do is to help members get a better grip on what their credit union has proposed to do and what their rights are in evaluating and making this decision," Blaine said. "There are all sorts of questions up in the air right now. Does a credit union have to hold a special meeting if its members demand one in a petition? That's the question from DFCU and I am sure that there will be other questions which come out of these other conversion efforts as well that are going to need answers."

So far, Chambers said, the group has not provided any financial support to the members from the $332 million Lafayette Federal Credit Union, but have been contacted by a group of members. There has not yet been any calls from members of Think FCU, he said.


© 2006, Used with permission from The Credit Union Times. All rights reserved.

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