Massachusetts Credit Union League President/CEO Dan Egan defended the credit union charter while responding to an announcement [pdf] that $1.8 billion asset HarborOne Credit Union, Brockton, Mass., may convert to a mutual cooperative bank.
“The league strongly believes the member-owned, not-for-profit, credit union charter is the charter of choice for providing the public with consumer-friendly financial products and services, and [allowing] credit unions to offer a far better economic return,” Egan says. “Credit unions now have 2.5 million members in Massachusetts and 92 million members nationwide because they put the interests of consumers first. In the last quarter of 2011, credit unions grew dramatically as consumers searched for a financial institution that would best serve their needs.
“While a credit union’s management may appreciate the operational advantages of a bank charter, those benefits must extend to the credit union’s members,” Egan continues. “Any charter conversion should be approached from the perspective of what is best for the credit union’s member-owners.”
Egan acknowledged the restrictions credit unions face including business lending restrictions, lack of access to alternative capital, higher net worth requirements, and defined fields 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,” he says. “It is vitally important that legislators and regulators pay heed to these challenges and work to adopt new laws and regulations which keep the credit union charter viable.”
Egan says the historical foundation of the credit union movement provides the rationale for modernizing credit union laws. “The credit union charter was first established by the Massachusetts Legislature in 1909 as a means of creating a parallel system of nonprofit banking for consumers to balance the interests of the for-profit banks. That mission is more vital than ever, and lawmakers must give credit unions the tools they need to accomplish that mission.”