Battle Rejoined Over DFCUFinancial

Register now

DETROIT - (05/30/06) – The fate of nine director ofDFCU Financial and their would-be try to convert the credit uniongiant into a mutual savings bank will be decided by the courts,after all. Two long-time members of the $1.8 billion credit unionfiled suit in U.S. District Court here Friday asking the federalcourt to enforce the credit union’s bylaws–the socialcontract every credit union establishes with its members.Specifically, the members asked the court to enforce the bylawrequiring the credit union to call a special meeting if more than500 members request it. The members, Richard Sly, a formerdirector, and Raymond Ward, noted that more than 1,760 DFCU membershave signed petitions asking for a special meeting where they planto vote out all nine directors. The credit union has ignored theirrequest, insisting two weeks ago that to recall the volunteer boardwould threaten the safety and soundness of the credit union, one ofthe most successful in the nation. The action is backed by DFCUOwners United, a members group that initiated the recall drive, butwhich is not involved in the suit. “We support whatthey’re doing,” Margaret Blohm, one of the leaders ofthe members group, told The Credit Union Journal. The suit alsoasks the court to bar DFCU from spending funds and using creditunion personel to campaign against the board ouster. DFCU has spenttens of thousands of dollars in recent weeks to buy advertising,mail literature, develop a web site, and cater a special event allto try to prop up the embattled directors who angered members bytheir attempts to change the credit union into a bank. “Thespecial meeting to vote on the removal of the directors from theBoard is not DFCU business for which DFCU funds and employees maybe utilized,” says the suit.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER