ACB: Press Releases

Contact:	Robert Schmermund (202) 857-3104 Jim Eberle (202) 857-3145	Jim Eberle (202) 857-3145 (work) (703) 893-2593 (home) [email protected]	For Immediate Release February 26, 2004 #04-10
E-mail: [email protected]

AMERICA’S COMMUNITY BANKERS DEFENDS MUTUALS FROM RAIDERS IN FORCED CONVERSIONS

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WASHINGTON, D.C. — America’s Community Bankers, which represents virtually all mutual savings banks in the country, strongly urged a committee of the Connecticut Legislature in Hartford today to abandon a bill that would make it easier for interlopers to raid the assets of mutual banks.

Testifying at a hearing of the Banks Committee, Charlotte Bahin, ACB’s senior vice president for regulatory affairs, said that under SB 363 activist depositors would have “an easy way to get a profit for nothing with no thought about the long-term viability of the institution or the community.”

The bill would allow activist depositors to pressure a mutual bank’s management and board to convert, said Bahin, which would be disruptive to the mutual savings banks in Connecticut and nationwide, and to their customers.

Bahin said each insured depository institution should have the choice to convert its charter when it is in the interest of the institution to best fulfill its business plan. “Each mutual institution should have the ability to decide to convert or not convert based on the needs of the institution, its operating strategy, its need for capital and its plans for the future, not because pressure from depositor groups, community groups or others is being applied,” Bahin said.

The bill would change an existing conversion process that provides protection for depositors, the institution and the community, Bahin said. “The current process provides the commissioner of banking with an appropriate level of guidance and flexibility to approve applications.”

Bahin said the Connecticut bill would “create a situation in which the motivation for conversion likely would be driven by pressure to convert by those persons seeking a windfall. . . rather than the best interests of the mutual bank and the community it serves.”

“The worst effect of the bill,” said Bahin, “is that after years of court cases and regulatory refinement to minimize [the pressure to convert], the stakeholders with the most to lose in a conversion will in fact lose the most. The community that relies on the bank for services will not have a bank, and customers who rely on the bank will have to go elsewhere.”

Bahin said passage of the bill in Connecticut could have a spillover effect on mutuals elsewhere. “To the extent that ‘professional depositors,’ who seek a windfall see that pressure to convert can be successfully brought in Connecticut, they will try it in other states.”

ACB adamantly supports the continued availability and vitality of the mutual form of organization for depository institutions. “As the advocate and voice of mutuality, ACB will continue to defend charter choice,” Bahin said.

Click here to read the testimony.

America’s Community Bankers is the national trade association committed to shaping the future of banking by being the innovative industry leader strengthening the competitive position of community banks. To learn more about ACB, visit www.AmericasCommunityBankers.com.

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