Members of Columbia Credit Union are apparently going to re-vote their controversial ballot to convert to a mutual savings bank, after state regulators ordered credit union officials last week to resolve the conflict with dissident members seeking to reverse the vote.
Officials with the Department of Financial Institutions, angered over the Columbia board's rejection of a member petition initiative, directed credit union officials to come to an agreement to hold a special meeting of the members, or else face state sanctions. "We believe the board of directors is in violation of the law," said Linda Jekel, director of the DFI's credit union office, after the board voted to deny the members' petition.
The credit union regulator had issued a legal opinion the previous week validating the member petition from Save Columbia CU, signed by almost 3,600 credit union members seeking to challenge the close November vote to convert to a mutual savings bank. In its opinion the DFI noted that the 3,600 member signatures were far more than the 2,000 required under the credit union's bylaws to force a special meeting of the members, and directed Columbia to hold such a meeting within 20 to 30 days.
But when the board met three days after receiving the state's opinion it chose to ignore the directive, claiming that holding a special meeting with fewer than 30 days' notice would not give proper deference to the credit union's other members who did not sign the petition. The board said the original vote to change Columbia's charter required notification of the membership 30, 60 and 90 days prior to a Nov. 3rd Special Meeting and a mail-in ballot process. "Columbia's board contends that the same notification requirements used in the original conversion vote should be applied to any process that proposes to change it," said Board Chair Karen Martel after the action.
The proposed special meeting where members would re-vote on the conversion would exclude most credit union members from participating, whereas the original vote was conducted by mail ballot and special meeting, asserted Martel. "Accepting a petition which doesn't allow for all members to participate would have been negligent on our part," she said.
But state regulators were clearly put off by the board's action. "The legislature clearly intended that the membership, who own the credit union, can request a special meeting and petition for it," said Jekel, who added she was meeting with the state's attorney general to prepare some kind of enforcement action to compel the board to hold the special meeting.
By mid-week Jekel notified the Columbia board the DFI was preparing to bring a cease-and-desist order against the credit union unless it agreed to negotiate with the petition group on terms for a special meeting where the conversion ballot question would be re-voted. When lawyers for Columbia CU came to see Jekel Wednesday afternoon, she told them DFI was prepared to give them until noon Friday to negotiate with the group calling itself "Save Columbia CU" and to set the date and terms of a new vote, or else face a civil action by the state.
Steven Straub, the former CEO of Columbia who has become the spokesman for Save Columbia CU, said his group was prepared to negotiate directly with credit union management on a new ballot. "You wonder why they didn't do this with us from the beginning," he said.
Throughout last week Columbia CU was running ads in the local newspaper supporting the board and its actions and arguing its case for converting charters.
The new vote will render moot a 10-week review conducted by NCUA into whether the contested November vote was valid. NCUA was expected to issue its decision late last week, but by then the agreement to hold the vote again would have made that decision meaningless. Under that vote, the question to convert to a mutual passed by a 52% vote, just more than the required majority.
By using the state's wildcard provision allowing state charters to opt for federal rules, Columbia officials were able to choose the more lenient majority requirement for the conversion vote, instead of the state statute requiring two-thirds of voters to vote in favor.
