We've been talking about the principal problem with the escalating pace and size of credit union mergers [7/21 post - link]:
In general, the merger agreements approved by the boards of directors of credit unions merging (selling) to other credit unions defy economic reason and are not in the financial best interests of the member-owners - the folks those individual board members are elected to represent.
As such those merger agreements appear to be a clear breach of fiduciary responsibility.
The proposed merger example given in the 7/21 post was between two Massachusetts CUs: Brightbridge CU and AAHRA CU. You'll note that a much better and more financially responsible proposal would be to payout $2k to each of the 6,000 AARHA members in connection with the merger. The AARHA members are appropriately rewarded for the success of their credit union and Brightbridge benefits from an expanded geographic footprint, 6,000 new members, 4 more branches, and gains @$150 million in assets.
Nothing unusual about the proposal - in fact it mimics "the industry standard" for mergers as outlined by the National Credit Union Administration (NCUA).
Many financial speculators and predators will enjoy "a big unearned payday" if merging credit union members - like those at AARHA - continue to receive less than their fair share of the credit union's member equity.
"But the NCUA and State regulators say it's OK?" Do they?
