Solution Eyed For IPO Scheming

ALEXANDRIA, Va. - Steven Bisker is no Johnny-come-lately to the conversion game. The former NCUA attorney has been fighting for years to stop credit unions from converting to mutual savings banks, and has been instrumental in blocking several such efforts-in the cases in Columbia CU in Vancouver, Wash., DFCU Financial in Dearborn, Mich., and Lafayette FCU in Kensington, Md.

Bisker believes one way of assuring that members share in the lucrative initial public offerings undertaken by their credit unions after they convert to mutual savings banks is to require that the depositors of the MSB be given shares on a pro rata basis in the new publicly traded bank free, just like they are in insurance companies that undergo de-mutualization.

That way, loyal member/depositors of a credit union-turned-bank, many of whom cannot afford to buy stock in IPOs, would earn the benefits of the de-mutualization. It would also serve as an inducement for the member/depositor to maintain their relationship with the institution after it sheds its credit union charter. As in insurance de-mutualizations, the company would be free to sell additional shares to raise capital.

"That's how they do it in the insurance industry. It's very simple," said Bisker.