Cooperative Businesses Oppose Harmful
Credit Union Provision in State Budget
MADISON, Wis. (May 13, 2011) – Wisconsin’s cooperatives are concerned about a surprise motion inserted into the state budget that could create a new process for taking member ownership and control away from the 2.2 million Wisconsin credit union members.
The provision, part of a package of items approved on a party-line 12-4 vote by the Legislature’s Joint Finance Committee May 12, creates new state authority for converting a credit union to a mutual savings bank. The motion came as a surprise to Cooperative Network and the Wisconsin Credit Union League.
“Cooperative Network and the Wisconsin cooperative business community strongly object to a very harmful policy—rather than budget provision—being included in the state budget when it was never introduced as a bill, was never heard and debated during an open policy committee hearing, and was not noticed in advance of the Joint Finance Committee meeting. Moreover, this provision could greatly harm Wisconsin consumers because it does not include sufficient protection for the state’s credit union members,” said Cooperative Network President and CEO Bill Oemichen.
Oemichen, the state of Wisconsin’s former top Consumer Protection official, noted that while federal law has a credit union conversion provision for federally chartered credit unions, it includes detailed safeguards to protect the credit union’s members, including requiring the disclosure of financial and other relevant information to members prior to the member vote and requiring the board of directors to explicitly find that conversion would benefit the credit union’s members. None of these provisions are included in the proposed state law. Oemichen also noted that credit union conversions in other states have often been the result of attempts by management and boards of directors to grab ownership of equity away from the member-owners.
Credit unions, like other types of cooperatives, are owned by their members rather than by stockholders. Upon liquidation of a credit union, the members would be entitled to receive the entire amount of equity in the credit union.
“We urge members of the State Senate and Assembly to remove this non-fiscal provision from the budget and make it available for public debate,” said Oemichen. |
