CARLISLE, Penn.–The Committee for Cornerstone FCU Independence, a group of CFCU members that opposes CFCU’s bid to merge, is now asking NCUA to take a more rigorous approach to merger requests, and to take a harder look at its preliminary approval of a merger between Cornerstone and Belco Community Credit Union in Harrisburg, Penn.
As CUToday.info reported here, despite the organized opposition—which included Cornerstone FCU’s former CEO–and much debate over reasons for the merger, members of $105-million Cornerstone FCU voted in favor of combining with the $450-million Belco Community CU. Members voted 1,100 to 630 in favor of the merger at a special meeting at the Comfort Suites in downtown Carlisle.
In a new letter to NCUA Executive Director Mark Treichel, the Committee―led by retired Cornerstone CEO David Keffer―argues that the regulator’s current review process leaves members of sound, successful credit unions vulnerable to the self-serving actions of boards and senior managers.
The letter explains in detail how the regulator can close the loophole these mergers are exploiting, and reinforce its commitment to policies and practices that protect member ownership.
“These insider-arranged transfers of control threaten the reputation and unique cooperative nature of the credit union system,” Keffer said. “Action needs to be taken to put the member-owners at the center. A powerful way to begin this process would be to make sure all points of view get equal hearing before a vote is taken.”
The NCUA is currently reviewing the proposed merger.
According to the Committee for Cornerstone FCU Independence, while the vote was in favor of the merger, much of that balloting was by mail prior to the group’s efforts to raise awareness, and that votes cast at the meeting itself went 5:1 against the merger “after members there had an opportunity to hear from opponents of the takeover.”
“Tell the members earlier, tell them more often, and tell them more completely,” Keffer said. “The NCUA already has the authority to require that, as well as the authority to require that the Cornerstone-Belco merger vote be done-over.”
He added in a statement that reacting now would help prevent repeats of scenarios like the Belco-Cornerstone merger, “where the smaller credit union already was offering better rates and service than its suitor.”
“The NCUA has multiple authorities to require that this merger process be paused and at the same time set a new standard for transparency and open debate,” Keffer said. “The NCUA can quickly move to restore integrity to the merger process and reaffirm fundamental principles about the member-owners’ rights and roles. I hope the regulator will do that soon.”