It wasn’t even 48 hours past Valentine’s Day, and Jim Blake wasn’t showing the love for his industry.

Blake is a recent chairman of the Massachusetts Credit Union League, and is the CEO of Brockton-based HarborOne Credit Union, the second largest such institution in the commonwealth. Blake had just announced the heresy that HarborOne is considering converting to a mutual cooperative bank.

For Bay State credit unions, that’s a lot like having your favorite, died-in-the-wool Democrat suddenly claim he’s becoming the head of the local Tea Party.

The idea that the $1.8 billion institution may change its robes set off predictable comments from sparring bank and credit union organizations. The Massachusetts Bankers Association (MBA), which wastes no opportunity to spit on credit unions, acted as if the proposed conversion was the most natural thing in the world. MBA President Dan Forte told B&T reporter Matt Brown that “it seems like a natural progression,” adding, incorrectly, that “it’s not uncommon nationally.” (There have actually been less than a dozen such conversions since the mid-1990s). He even, somewhat, complimented HarborOne. “They’ve been a very progressive, bank-like entity.”

For the Mass. Credit Union League, the news was anything but progressive. League president Dan Egan issued a terse statement that HarborOne ought to be considering what’s best for its members, not what’s best for the institution. The League believes that being a credit union, rather than being a bank, would best serve those members.

But the HarborOne move should be noted not just because it again raises the discord between banks and credit unions, but because it might be the situation that could undercut all that enmity. Jim Blake may not be defecting from his colleagues – it’s possible he’s becoming their best weapon.

Let’s be frank: Bankers hate credit unions. They don’t just dislike CUs, they seethe over them. The Mass. Bankers Association even went so far as to create a specific anti-credit union website, www.creditunionruse.com. It’s a fun site to play around on, especially if you enjoy spiteful whacks at the opponent.

But should HarborOne proceed with its conversion, and eventually end up a member of the MBA, the banking group might want to go in now and rethink some of the propaganda it’s got up on that site against HarborOne.

Accordingly, credit unions see themselves as a group under siege. They protect themselves from those attacks by huddling ever closer together, in solidarity and isolation. They don’t oppose the banks for being banks, they oppose them because they are their oppressors.

A Taxing Situation

All that rancor stems from the fact that credit unions don’t pay federal or state income taxes. That lets them offer products and services for less than the community banks that compete with them (but then, so does their mutuality: no calls for quarterly profits from stockholders). Bankers say that’s an unfair situation. Credit unions point out that they are restricted in who they can serve, and what products they can offer – restrictions that don’t apply to banks.

So here’s where the potential HarborOne conversion could prove to be a case that undercuts all the arguments.

In a notice to members, posted prominently on its website, HarborOne’s Board of Directors lays out its rationale for conversion. Access to additional capital is one reason, since a credit union has no means of building capital other than by retaining earnings. But HarborOne says it’s not immediately seeking to raise capital. In fact, it would be converting to a mutual co-operative bank, not a stock one.

Its bigger issue is that it’s currently feeling constrained by its geographic boundaries, because it has a limited credit union charter. It can only operate in four counties: Barnstable, Bristol, Norfolk and Plymouth. It would like to branch into Boston. Moreover, it’s also limited in the scope of its lending. Although it hasn’t yet hit its limit for small business loans, it sees huge opportunity there – banks don’t have a pre-ordained cap.

But HarborOne’s board thinks it can make this conversion and not substantially affect either the lower loan rates it offers to members, or the higher deposit rates. It believes that the income it derives from making more loans, and serving a bigger geography, will allow it to continue to act like a credit union. In fact, it doesn’t even worry about suddenly having to pay taxes. The board states that the tax burden “would be more than offset by the enhanced earnings capacity.”

So what Jim Blake and company are saying is that they believe in free market competition, which is exactly what the banks have been keening about. They just believe they can be better at it, even on a level playing field, than their community bank counterparts. And they’re saying that, regardless of how much the banks stomp their feet about credit unions being essentially free to do what they please, that’s not the case. The limits of a credit union charter continue to actually limit them.

If HarborOne can pull this off, it will be an interesting demonstration that what credit unions have been saying all along is true, and that what banks have been saying all along is – well, let’s be polite and call it exaggeration.

It’s ironic that in order to prove the banks wrong, HarborOne may have to become one.

Vincent Michael Valvo is president of Agility Resources Group.