In this report, University of California professor and former Chief Economist at the Office of the Comptroller of the Currency James A. Wilcox examines the phenomenon of charter conversions among financial institutions, particularly the conversion of credit unions to mutual thrift organizations.
In this report, University of California professor and former Chief Economist at the Office of the Comptroller of the Currency James A. Wilcox examines the phenomenon of charter conversions among financial institutions, particularly the conversion of credit unions to mutual thrift organizations.
While those conversions are not substantial in terms of total organizations of percent of credit union assets, they have attracted attention because the size of institutions involved appears to be growing. Credit union to thrift conversions are often a first step toward stock ownership.
This report presents a simplified model that may be used to analyze under what circumstances average credit union members might benefit from a conversion to a stock-owned institution. The author presents a variant of the demutualization model that the NCUA could implement without additional legislation from Congress. This method would limit the ability of some members and external investors to benefit at the expense of the majorities of members who, under current OTS and FDIC regulations, typically do not buy stock in conversions.
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