Calling Congress In

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The NCUA said it would not intervene regarding DFCU Financial's decision not to hold a special meeting to recall its board, leaving DFCU Owners United, the group that is seeking the board recall, with no recourse but to sue the credit union.

The recall effort was launched in response to the credit union's plan to convert to a mutual savings bank, a plan it has since withdrawn.

"At this point, it's between the members and the credit union," John McKechnie, chief spokesperson for the NCUA told The Credit Union Journal. "We've made our position clear. It's our opinion that the supervisory committee, in the event of a recall, would become the temporary board until a new board is elected."

In a letter posted on the CU's website, www.savedfcu.com, CU leaders said that a special recall election would violate provisions of the Federal Credit Union Act. The $1.8-billion CU said it believed that a recall of the nine directors could violate the law by reducing the number of directors below the federally mandated minimum of five directors, despite NCUA's explanation that recalling the board would leave the supervisory board in control of the CU until a new board could be elected.

The credit union's decision to ignore the petition came as a surprise to the members' group since DFCU Financial had launched an effort to protect the board members targeted by the recall with a series of ads. Billboards, fliers and a full website devoted to the issue.

Counting On NCUA To No Avail

Up until NCUA's announcement, DFCU Owners United had been counting on regulators to intervene on the grounds that the credit union's position is in violation of the democratic process. On learning the agency had decided to stay out of the recall issue, a spokesperson for the members group expressed dismay at NCUA's decision.

"The regulator is supposed to protect the members," said Margaret Blohm, spokesperson for DFCU Owners United. "I think they're scared and that's too bad."

With NCUA's decision not to intervene, DFCU Owners United are now turning to members of Congress for help.

"I want Congress to know that we, the credit union members, need protection from those boards and managements that are not looking after the best interests of the member-owners," Blohm said. "I've been on the phone to Washington trying to see if there is somebody that can help us."

She called DFCU Financial's decision "more of the same treatment of not listening to members."

While Blohm said it would be up to the members to determine the next step, she suspected they would want to follow through with a lawsuit against the CU's leadership.

"The regulator is the preferred way to go, but if they won't step in, we'll have to raise a bunch of money (to file a lawsuit)," Blohm said.

While the Michigan Credit Union League said it would not take a stance on whether the board members should be removed, it agreed with DFCU Owners United that the credit union couldn't just ignore its own bylaws.

"The DFCU credit union's decision to not comply with its own bylaws on the matter of the special membership meeting will undoubtedly raise many legal questions that will have to be resolved by the NCUA or a court of law," said Dave Adams, MCUL CEO. "The credit union's bylaws are a contract between the credit union and its members."

Three Times The Signatures

Adams pointed out the DFCU Owners United presented more than three times the required 500 signatures calling for a special membership meeting.

"Now the credit union is saying that they (the board) have decided not to honor the bylaw provision requirement for a special meeting," Adams said.

He urged the NCUA to become more involved and encouraged both sides to act in a legal, civil and honest manner in carrying out the requirements of the CU's bylaws.

Blohm said that she couldn't imagine that the members will appreciate that the credit union has taken away their rights. She said the group would likely meet in the near future to discuss their options.

"They call us a small minority but there are thousands upon thousands and growing who are watching this," Blohm said. "I can't imagine that 160,000 members will be OK with the fact that the credit union is telling them they have no right to have a say in all of this."

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