Too Wooed

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Tom Glatt, the chief executive of El Segundo-based Continental Federal Credit Union, wishes Paul Parish would go away.


But Parish, the chief executive of Wings Financial Federal Credit Union, won’t take no for an answer. In fact, he plans to press forward on what is essentially a hostile takeover attempt of Continental, the first of its kind in the credit union world.


“Somebody needs to tell (Parish) it’s over,” said Glatt, whose board voted unanimously last week for a third time to reject Wings Financial’s merger proposal. “We said our piece, there’s nothing more to discuss or to debate except what our industry regulator might do to prevent this type of harassment in the future.”


But Continental’s vote won’t stop Wings’ marketing staff from continuing to hit airport terminals and branch locations in Houston and Newark this week and possibly Los Angeles International airport again sometime next month to continue to state their case to Continental members. Wings is appealing to Continental’s members and customers to ask their credit union to let members vote on a merger.


“Continental FCU belongs to its members,” Parish said. “Not to its board, not to its management, and not to any of management’s friends. That’s the essence of our continued message: ask for a vote.”


Continental is a credit union for Continental Airlines and U.S. Airways. Wings, based in Minneapolis, is a credit union originally for Northwest Airlines but now serves employees of many airlines.


Earlier this month, Wings representatives were thrown out of Continental’s lobby because they were passing out flyers to customers.


“This is incredible,” Daniel Mica, president of the Credit Union National Association, the industry’s association, said of the ongoing fracas. “We’re aghast at this and everybody in the credit union arena is wondering are they next. Right now there is a complete regulatory vacuum pertaining to unsolicited takeovers and we’re the only segment of the financial services that has no rules of the road in place.”


Mica met last week with leaders of the Consumer Federation of America, the National Cooperative Business Association and the National Association of Federal Credit Unions to discuss coming up with the framework for what would in essence be an “anti-stalking” provision that will later be considered for ratification by the industry’s regulator, the National Credit Union Administration.


John Mckecknie, a spokesman for the regulator, said merger rules are already in place for credit unions that choose to merge, adding that they never got any paperwork from Wings stating that anything was going forward.


“This is an unprecedented situation that’s difficult to speak on because there is no merger,” he said. “That said, we’re willing to review any proposal put forth by the industry to examine this type of approach.”


Several pointed out that Wings has at least seemed interested in switching from a credit union to a mutual savings bank. That didn’t sit well with Continental, which wants to remain a credit union.


In an August letter to NCUA, Wings’ Parish expressed dismay to a then-proposed rule which was eventually approved in December. The rule ensures that members of an individual credit union are fully informed of the reasons for a conversion to a bank, have adequate time to weigh costs and benefits and the opportunity to voice their concerns to their board of directors.


In his letter, Parish said the disclosure requirements were “overreaching and beyond the scope of regulator responsibility.”

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