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Big banks have been getting some big lumps, and progressives have responded by encouraging depositors to Move Your Money to a Credit Union.  But what if your Credit Union decides it would rather be a bank?

I'm a long time member of Tech CU, which is short for Technology Credit Union.  Tech CU was founded 52 years ago, chartered to serve employees of Fairchild Semiconductor in what wasn't even Silicon Valley yet.  In 1983 they expanded to serve more high-tech employees and became Technology Federal Credit Union.  Today they have $1.7 billion in assets and 74,000 members in six San Francisco Bay Area counties.

Back when I first joined in the late 80s, Tech CU was a Federal Credit Union.  I wasn't too clear why they stopped being one, but it looks like they aren't done metamorphisizing.  A few weeks ago I received a call from the credit union, telling me there would be an upcoming election on Tech CU becoming a Mutual Savings Bank.  Why would they want to do that?  I had no information but something sure didn't sit right about that call.  

And this morning I heard from them again.  The previous caller was friendly.  This lady was...  Follow me below the squig-a-l'orange and I'll tell you all about it.

Ongoing Since October

This move has been in the works a lot longer than when the membership first started getting the phone calls in June.  And just like the move from Federal to not-Federal Credit Unionness, they aren't being upfront about what they're doing this time.  Their own history page neglects to mention that little charter change.

Look what else isn't being mentioned on their website?  Here is the main page you see when you log in.

Main page of Tech CU website
Technology Credit Union's main web page
All About Tech CU omits something important
And at left is what you learn when you click on About Tech CU.  One would think that this conversion would feature prominently.  And one would be wrong.

Notice what you don't see?  How about We're considering becoming a mutual savings bank instead of a credit union?  There was a press release about it last October.  Well, it's gone now, because if they left it up, then they have to show membership comments on the news.  Now this announcement is conveniently missing.

This article in Credit Union Times covers Tech CU's "flirtation" with mutual bankdom.  Their management claims the conversion would allow them to "significantly expand [their] commercial lending business" and "diversify [their] loan portfolio."

Exploiting the Loopholes

Now, remember I mentioned above that Tech CU was no longer a Federal Credit Union?  That's because they are a California state-chartered credit union.  And there is no blueprint for a state-chartered credit union turning into a bank.  California's financial code simply doesn't cover it.

California's financial code explicitly provides for state-chartered credit unions to convert to federally chartered institutions and how to do that. Likewise, it provides for federally chartered CUs to adopt the state charter. But it is silent on state-chartered credit unions conversion to mutual banks.

Silencing the Objections

Friday, after close of business, I received two emails from Tech CU.  It turns out that the law says there is a 35 day comment period if a credit union wants to morph into a bank, and all comments submitted during that period must be shared with membership. Tech CU sent them on to us all right... after close of business on the 35th day.  That means they don't have to share any other comments they receive on the matter with its members.  

Fortunately, these emails told us there was already a move to organize against this push.  Two members, no doubt the two who got their comments in during the 35 day period, joined forces.  A members organization called SaveTCU is now up and running, complete with a websiteand Facebook presence.  And Tech CU already lost a round in the social media follies when SaveTCU fans began replying to their upates.  Tech CU's webpage now only has an Info and a Friend Activity section.  They don't want their members speaking to them in public.

What's Wrong with Conversion?

Here are Save TCU's arguments against the bank conversion:

  • Bye Bye Credit Union -- No more one vote per member with a mutual savings bank.  Instead it could be one dollar, one vote.  Sound familiar?
  • Bye Bye Better Rates  --  Credit unions offer better rates because they not-for-profit.  This conversion is going to make some people a lot of money, but it won't benefit the members.  How could it?  It's going to be run for a profit.
  • Bye Bye Capital  -- 9.99% net worth ratio and $1.6 billion dollars just sitting there, waiting for someone to turn it into a bank.  And that means the people running the bank, the Board (unpaid) and the Executives (all former bankers) would vote to get PAID like bankers.

Here's the key point, according to Daniel Rodriguez of Save TCU.

Buried in a letter sent to members is perhaps the real reason why the officers and directors of Technology Credit Union want to convert to a mutual savings bank. The disclosure reads:
POTENTIAL PROFITS BY OFFICERS AND DIRECTORS. Conversion to a mutual savings bank is often the first step in a two-step process to convert to a stock-issuing bank or holding company structure. In such a scenario, the officers and directors of the institution often profit by obtaining stock in excess of that available to other members.
[...]If that’s not enough, the real feeding frenzy begins when mutual savings banks convert to stock-issuing institutions. Over 80% of credit unions that convert to mutual savings banks eventually issue stock. The Board could then award themselves and the officers generous stock-related compensation packages which, according to a study by the Credit Union National Association, netted additional compensation averaging $742,000 for each director and more than $1.2 million each for the chief executive and other top executives.
Rodriguez also has arguments against the glossy mailer that went out to members.  For me, the key item is that a bank would pay taxes, and money to pay them is going to have to come from somewhere.

A Resource for Opposing Conversions

The National Center for Member Trust has more information on the credit union to bank process and why you should oppose it.  SaveTCU co-founder Robert Marinace, in his email to the membership, noted the following links to check out.  The links below do not have Tech CU's trackers embedded in them since I typed in the website directly rather than click on theirs.

Continuing the Push for Mutual Bankery

Meanwhile, Tech CU is now trying to scare its members that the credit union tax exemption is about to be repealed.  They're offering carrots too; entering members into a drawing for iPads if they vote.

And as I described in the intro, I got the very articulate and persuasive, dare I say pushy caller from Tech CU today.  When I realized that this was another call encouraging me to vote (yes) on the proposal, I asked if she was from an agency or worked for TCU.  She said she worked for TCU.  (Dang, I forgot to ask if she was a temp.)  She was quite determined to counter my arguments.  Fortunately, I had a few and I ran through them: rates and fees getting worse, members having less say over operations, the mutual bank to stock bank two-step.  When she realized that I wasn't buying her load of field fertilizer, she began pushing on the nonsensical idea that I couldn't object to a credit union converting to a bank because I had never "experienced" it before.

Well, now I caught her in a really obvious whopper.  You see, I was trying to derail her from what was an obvious collection of meeting objections, and began asking her questions.  And before this "experience" nonsense, I had asked her if she could name a single credit union that became a mutual savings bank and remained a mutual savings bank for at least five years.  No she couldn't, because "this process is just beginning."

So to her "experience" wankery, I noted that by her own admission, there weren't any credit unions that had converted into mutual savings banks and STAYED mutual savings banks.  Therefore, nobody had the experience of having their credit union bankify and stay a good thing. Sheesh.

I asked her five times if she would read the study showing all the conversions then morph into stock banks. She said she would.  Yeah, right.  With Tech CU's record of hiding the objections and refusing to comment on any of these stories, that doesn't seem very likely.

Tracking the Opponents

Today we find out that Tech CU isn't just pushing chirpy "attitude swayers" on its membership, it's spying on them as well.  A new story in Credit Union Times reports the emails came loaded with trackers.  That would allow Tech CU to see who clicked on links for more information.

Rodriguez and Marinace said they were shocked to discover their email arrived in members’ mailboxes with tracking technology, called servlets, that allows the credit union to identify and track members who click on links for further information contained in the email.  [...]

In addition, Rodriguez noted that including the servlets in the email made them more likely to have been blocked by members’ mail programs which incorrectly identify them as spam because of the number of servlets the emails included.

Thus, Marinace and Rodriguez said, a member who clicked on a link to a Facebook page belonging to a charter change opposition group could have both the fact they have done so as well as their identity collected by Technology Credit Union.

Rodriguez has specifically asked the NCUA (National Credit Union Administration) if this is a violation of the rules, as the credit union should only be allowed to include a one paragraph introduction to member comments.  Needless to say, Tech CU isn't talking about this.

Why is this happening now?

Does this process remind you of anything?  It looks a lot like the "parent choice" movements, funded by outside money, pushing charter schools over public schools.  They certainly aren't doing that out of the goodness of their hearts.  Our credit unions are now in the crosshairs as well.  

Who is aiming the gun?  Maybe we need to look into this firm:

According to CU Financial Services, a Portland, Maine consultancy that helps credit unions change to bank charters, if Technology Credit Union succeeds in moving to a bank it will become the 37th credit union to change charters since 1995.
What do you know?  A consultancy that hleps credit unions change to bank charters.  Yes, there is definitely money to be made, but it won't be for us.  Given that Tech CU has been hiring a number of new executives from the banking world, they see this as a done deal.

What can I Do?

If you are a member of Tech CU, vote AGAINST the proposal.  Ballots will be arriving soon.

If you are a member of Har-Co Federal Credit Union (Harford County, Maryland), same thing.  Vote No!

Be on the lookout if your credit union starts talking about conversion.  If they do, be sure to comment during that crucial 35 day comment period.  And of course, vote no.  Vote for your credit union, not their bank.


What is your reaction to knowing credit unions can push a bank conversion onto its membership?

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Comment Preferences

  •  Tips for keeping credit unions credit unions (35+ / 0-)

    Please make sure your friends in the SF Bay Area hear about this, and watch out for it happening at your CU.

    In capitalist America, bank robs you!

    by madhaus on Mon Jul 23, 2012 at 02:52:42 PM PDT

  •  Sounds like the pirates have boarded the ship (13+ / 0-)

    Seriously, they are spending YOUR money to try to convince you that you would get a better banking deal if some fat cat was getting his cut? Wow. Hope you defeat these piratical scoundrels. Send the greed heads packing, back to Wall Street.

  •  I recall reading about this phenomenon (8+ / 0-)

    a few years ago. Didn't sound like a good idea then; doesn't sound like a good idea now.

    I bank with a credit union. The day they suggest they are converting to a bank is the day I move my money to a different credit union.

  •  Thanks for the warning (5+ / 0-)
    Recommended by:
    JeffW, Heiuan, oceanview, ZenTrainer, Mber

    I'll share this news with any friends here in the area. We're with Patelco for now.

  •  You will find (8+ / 0-)

    Columbia Credit Union in Vancouver, WA tried to do this. The membership voted it down and tossed out every member of the board of directors who spoke in favor of it.

    In the process they also lost alot of business. I would suspect there is an campaign to stop this at your credit union if not there should be.

    The membership stood to lose a great deal while the board of diectors stood to gain a fair amount from it.

    It is the heart that makes a man rich. He is rich according to what he is not what he has -Henry Ward Beecher

    by PSWaterspirit on Mon Jul 23, 2012 at 04:30:10 PM PDT

  •  I would guess (5+ / 0-)

    there are other credit unions one could join in the area.  Things change...not always for the better.

    •  Yes of course there are (2+ / 0-)
      Recommended by:
      Mr SeeMore, ZenTrainer

      But what's to stop them from taking the same route if we don't object?

      In capitalist America, bank robs you!

      by madhaus on Mon Jul 23, 2012 at 04:36:11 PM PDT

      [ Parent ]

      •  Aside from falsely-named Washington Mutual (2+ / 0-)
        Recommended by:
        madhaus, JeffW

        Mutual Savings Banks are depositor-owned. The question that you need to have answered is: will you guarantee with a million-dollar bond that you will never try to convert this mutual into a shareholder-owned bank?

        I like mutual savings banks about as well as I like credit unions, mutual insurance companies and all other co-operatives. It's an excellent method of allowing people to control the business they do business with.

        The problem is not with mutual savings banks, but with executives who make themselves rich by demutualizing and misleading depositors (or policyholders in the case of mutual insurance companies). If the executives will not buy a personal bond guaranteeing that they will never attempt to demutualize, you have your answer. Fire them.

        The GOP is the party of mammon. They mock what Jesus taught.

        by freelunch on Mon Jul 23, 2012 at 05:25:42 PM PDT

        [ Parent ]

    •  Sure but many won't know to do that (1+ / 0-)
      Recommended by:

      And won't know the implications of the change

      The modern GOP -- Big noise on the stairs, nothing coming down. 

      by PHScott on Mon Jul 23, 2012 at 04:47:17 PM PDT

      [ Parent ]

  •  On our knees before Capital (1+ / 0-)
    Recommended by:

    The total capitulation of every institution in our society in 2008-2009 ensured that Capital would learn nothing, except that if they choose to completely screw us, we as a nation, as a society, will whimper with joy to serve the every demand of our masters, and will ourselves shout down each and every one among us mere hoi polloi that might raise even the most timid question.

    The law, in its majestic equality, forbids rich and poor alike from sleeping under bridges. ~ Anatole France

    by ActivistGuy on Mon Jul 23, 2012 at 05:26:34 PM PDT

  •  I have wondered if that would ever happen. (1+ / 0-)
    Recommended by:

    I belong to 2 credit unions and will change if it ever happens to either of mine.

    Tracy B Ann - technically that is my signature.

    by ZenTrainer on Mon Jul 23, 2012 at 06:41:59 PM PDT

  •  sounds to me some direct action picketing is (1+ / 0-)
    Recommended by:

    called for since Tech CU is trying so hard to control the debate and limit info.  if i still lived in berkeley i'd help make signs and supply cookies and refreshing beverages.

    and the Lord spoke unto Abraham and said "I shall give you obedient & subservient wives in all the corners of the world" and Abraham said, "But Lord, you have made the earth round" and the Lord spaketh, "ROFLMAO."

    by bnasley on Mon Jul 23, 2012 at 08:30:35 PM PDT

  •  Bad example (0+ / 0-)
    pushing charter schools over public schools
    Charter schools are public schools.
    •  Perfect example (0+ / 0-)

      Charter schools are pushed in on parents who don't know they're being manipulated, resulting in less control or accountability to school board, parents, or teachers.  They pretend to be public schools, but they are the vampire squid of education.  Charters are brought in via high-pressure tactics onto school boards, teachers and parents who don't want them.  They suck money away from the rest of the system.  It's "bleed the beast" in action.

      Charter schools are dangerous.  The people pushing them are doing so to enrich themselves.

      In capitalist America, bank robs you!

      by madhaus on Mon Jul 23, 2012 at 09:29:35 PM PDT

      [ Parent ]

      •  Sorry, but no, specially here in California (0+ / 0-)

        I worked for Lodi Unified School district east of where you are for 16 years. After getting married I moved back to the San Diego area where I got a job working at a Charter School one of my old high school teachers had started. I've worked there now for 12 years.

        We don't pretend to be a public school, we are a public school. Here in California the charter laws are pretty strict. There are criticisms of charter schools posted here in DKos that are legit, in other states. Your paragraph above is full of "talking points" that are lacking in facts and it drives me nuts to see fellow liberals acting like Tea Partiers who get all red in the face and scream socialism and death panels and Obama was born in Kenya type stuff.

        There are no high-pressure tactics involved at our school, or any of the other charter schools in this area of San Diego. We have two high school programs, an elementary program and a digital academy program. Since there are two local school districts in this town, one for 9 - 12 and the other for k - 8, we have to have two different charters for our schools. The local school districts have no problem with our being here and have renewed our charters every time without hesitation. When we wanted to build a new school we solicited bonds (didn't go through the state for the money) and needed to renew our high schools charter early so that bond holders would be more comfortable buying the bonds knowing we had another 5 year commitment. The high school district had no problem doing that.

        While Charter schools here in California get 2/3rds the funding that other public schools get, and as such can only usually pay about 2/3rds the salaries that other public school employes get, we still have no problem attracting top notch teachers both at the high school and elementary levels. No high-pressure tactics needed, just a great work environment with great people.

        There are typically 400 students trying to get into our traditional high school program each year. There are only about 75 openings. At the elementary level there are usually about 800 students trying to get the 60 openings at the kindergarten level. So, I have no idea what you are talking about when you say the parents don't want us.

        We don't "suck the money away" from anything, we used the little we get to offer the students in this community a top notch education. There is nothing dangerous about us and there is no-one, from our executive director on down who is trying to use our schools to "enrich themselves."

        As I said, your example was wrong. I have a great deal of knowledge of how Charter Schools work here in California, the stuff that get's posted here at DKos about Charter Schools is often just wrong, specially as it pertains to this state.

        I rec'd your diary and even rec'ed you because I support what you are doing. I'm still a member of the credit union up in Stockton because they did such a great job while I lived in that area, and am a member of a credit union down here in the San Diego area as well. I would hate to see either of them go the direction yours is going and I hope you win that battle.

        •  Does your school charge tuition (0+ / 0-)

          or activity fees?  Does it have a parent association that provides significant funding?  

          --Mr. President, you have to earn my vote every day. Not take it for granted. --

          by chipoliwog on Tue Jul 24, 2012 at 04:16:36 AM PDT

          [ Parent ]

          •  Tuition? (0+ / 0-)

            I've never heard of a public school charging tuition. Do you have examples of that happening where you live?

            By activity fees I assume you mean for sports? We do the same as all the other schools, the students have to pay for their uniforms and equipment that they will keep. For example, if you play basketball at the end of the season you return your uniform so there is no charge. But if you are a cheerleader you do keep your outfit so you pay for it.

            We have a pretty good parent association for both our traditional high school and the elementary school. They actively do fundraising throughout the year and have been able to use that money to buy, for example, overhead projectors (the modern, camera hooked up to the computer type) for each classroom. But I know that took them about 3 years of fundraising to do. I'm not sure that is what you are asking though when you refer to "significant funding." I think it would be fair to say our parents are more involved and do more for our schools than parents at other local schools do.  

        •  You are talking about one school (0+ / 0-)

          I am talking about a way of doing business.  I watched Rocketship Charter push through four schools in Santa Clara County.  There were parents who spoke against it, they were ignored.  The skids had been greased.  Now this business is free to fire experienced teachers and hire a bunch of newbies and pay them squat.

          There are the occasional one-off charters that do a good job, but for you to claim that all charters in California are marvelous improvements isn't just wrong, it's naive.  This is big business, and schools should NOT be run like a business.  Because what is the goal of a business?  To create the goods or service for MORE PROFIT.

          In capitalist America, bank robs you!

          by madhaus on Tue Jul 24, 2012 at 07:38:31 AM PDT

          [ Parent ]

          •  No (0+ / 0-)

            actually I'm talking about most Charter Schools here in California.

            I am completely against the "for profit" Charter Schools, like Kipp and Green Dot. I assume that Rocketship is also for profit? Everyone I know at this school, and the other Charter Schools around here, are against that type of model. We believe that a Charter Schools focus should be on meeting the needs of the local community, not running a for profit chain of schools.

            There are over a thousand Charter Schools in California now, only a small percentage of those are for profit schools. I know that for profit charters have basically ruined the charter movement in states like Ohio. I think the fix is to pass legislation that does not permit for profit charters in California, at least ones that take public money (if someone wants to open a for profit private school, fine). This can be done, just like passing laws that require teachers at Charter Schools to have teaching credentials was.

            •  Yes Rocketship is for profit (0+ / 0-)

              Please cite some stats to back up your claims on profit vs nonprofit charters in California.  There are a lot of Kipps sitting up here as well, especially in the East Bay (centered in the poorer neighborhoods, natch).  Not familiar with Green Dot around here but I'll look for them.

              I would be delighted to get behind a no for-profit charter school law.  I am sure the Rocketships and Kipps will fight it very hard with lots of cash.

              Don't forget the parent choice trigger law, pushed for by the for-profit schools.  Now being used to bring in a for-profit in LA area, first time the law was exercised.  Parents wondering about all these meetings and flyers that appeared out of nowhere, obviously big money pushing this... Just like the credit union conversion push, which was my whole point.   And now I am going to end this threadjack, but would be happy to discuss charters with you in an appropriate diary.

              In capitalist America, bank robs you!

              by madhaus on Tue Jul 24, 2012 at 09:47:21 AM PDT

              [ Parent ]

              •  Fair enough (1+ / 0-)
                Recommended by:

                I apologize, I didn't mean to take this off in a direction that took away from your original diary.

                I've been planing to do some writing about Charter Schools so we can keep the discussion going. I'll try to build on this diary that was posted back in May. I'll focus on addressing issues that were brought up in those comments and some the issues you brought up.

            •  Clarification (0+ / 0-)

              I need to clarify something I said above, Green Dot is in fact not a "for-profit" Charter School. Green Dot is a 501c3 non-profit system. But my understanding is they are run by a private organization.

              I've heard both good and bad things about Green Dot. I'm not sure how I feel about private organizations running schools if in fact they are non-profit. I need to do some more research on that. I know that there are other schools being run in the same way.

  •  Lobby for changes to laws (1+ / 0-)
    Recommended by:

    Credit Unions need to be allowed to provide more commercial banking services. Companies that hire people in any significant numbers need financial institutions of sufficient size and strength to be able to lend money, process commercial instruments such as letters of credit, process cash, and a number of things that credit unions are prevented by law from doing.  If you want your money to work to build your community, we need credit unions to be able to participate in these activities and not leave them to the whims of commercial banks which take your money out of your community.

    --Mr. President, you have to earn my vote every day. Not take it for granted. --

    by chipoliwog on Tue Jul 24, 2012 at 04:25:07 AM PDT

  •  Move your money? (1+ / 0-)
    Recommended by:

    I think they are in love with the $1.6 Billion. It's yours - keep their hands off it. There are other credit unions.

    •  They seem to be driving members out (0+ / 0-)

      They've changed the branch intake from wait-in-line-for-a-teller to we'll-call-you-to-sit-down.  So routine transactions now take much longer to accomplish.

      Maybe they figure the small-stuff members will get pissed off and leave the CU while the ones with significant amounts are getting concierge service we don't qualify for?

      In capitalist America, bank robs you!

      by madhaus on Tue Jul 24, 2012 at 07:20:11 AM PDT

      [ Parent ]


    Madhaus:  We are opposing TCU's conversion to a bank.  Please tell me how to privately give you the contact info for our leadership and the reporter who wants to speak with you.  WE ARE RUNNING OUT OF TIME TO STOP THIS VOTE.

    Stories from one reporter so far:

    Latest op-ed from one of our leaders:

    P. Martin

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