DFCU Board Seeks 23rd-HourReprieve

DEARBORN, Mich. - (05/08/06) – Desperate directors of DFCUFinancial asked NCUA one last time to save them from having aspecial meeting of the members who plan to toss them out of office.But NCUA swiftly rejected the last-minute plea, repeating itstraditional stance that it does not get involved in credit unionelections. The DFCU board is now looking to Congress, which beginshearings this week on the growing controversy over credit unionconversions, for a final reprieve. In a letter to NCUA last week,DFCU asked the federal regulator to clarify several legal issuessurrounding the controversial recall, sources familiar with theletter told The Credit Union Journal. They are whether memberscould vote to recall all nine members of the Board, and whether theBoard is legally bound to hold the special meeting if the ouster ofthe volunteer board could jeopardize the safety and soundness ofthe $1.8 billion credit union. But NCUA told the at-risk directorsit is long-standing agency policy not to interfere with internalcredit union elections, unless the safety and soundness of theinstitution is in threatened. DFCU reported an outstanding 1.7%return-on-average assets for the first quarter and strong capitalof 13.2% at March 31, putting it far out of harm’s way. Angrymembers of DFCU Financial, who forced the Board to withdraw its bidto convert to a mutual savings bank, have petitioned for a specialmeeting where members will vote to remove all nine directors whovoted for the conversion. Under the credit union’s ownbylaws, directors have until Thursday--the day Congress will holdits hearings on credit union conversions--to schedule a specialmeeting and provide members with seven days advance notice of theevent.