Banks Look to Make Converts of Credit Unions

By Albert B. Crenshaw, Washington Post

After more than a decade of trying unsuccessfully to roll back the credit union movement in Congress and the marketplace, the banking industry has come up with a new strategy: If you can’t beat ‘em, get ‘em to join you.

In a small but significant number of cases, it seems to be working.

Last year in Texas, two credit unions, each with more than $1 billion in assets, converted to mutual savings banks, and another of comparable size in Michigan is seeking to convert. These transactions would bring to 26 the number of credit unions — out of a total of about 9,000 — that have converted in the past decade. Of those, more than half have gone on to become stockholder-owned companies — a far cry from the cooperative movement that spawned credit unions.

The size of the recent conversions heartens bankers and alarms many in the credit union industry, both for the same reason. As low-cost competitors, credit unions have exerted downward pressure on the fees banks charge.

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