Many Disappointed In Ruling, NCUA
A decision in federal court to throw out a case brought by members against DFCU Financial for allegedly failing to honor its own bylaws sent a disappointing message throughout the industry and pointed fingers back at NCUA.
U.S. Judge Lawrence Zatkoff dismissed the suit, citing the lack of subject matter jurisdiction is "facially unsubstantial," wrote Zatkoff. DFCU Owners United, the group that led the battle against the $1.8-million credit union during its efforts to convert to a mutual savings bank posted a notice on its website expressing disappointment about the court's decision and provided a link to the related documents.
DFCU Financial could not be reached for comment.
Dave Adams, president of the Michigan Credit Union League, said he believes that it was largely because of the NCUA's inaction on the issue that the federal court was unable to intervene on behalf of the members.
"The NCUA does not take a position on (bank charter conversions) except to say that credit union officials should honor their bylaws," Adams said. "This requirement should be required and enforced by both federal and state regulators."
Adams said the NCUA should address this precedent-setting situation and make reforms for the future.
"Failure to do so makes a mockery of the democratic process upon which the credit union structure is founded," Adams maintained.
The members' Attorney Bryan Walters on Thursday expressed disappointment over the judge's ruling but said his clients would continue work toward protecting members' rights.
"We are obviously very disappointed by the court's ruling," said Walters, of Varnum, Riddring, Schmidt & Howlett, LLP, Grand Rapids, Mich. "We remain firmly committed to protecting the rights of members of DFCU Financial Federal Credit Union to inspect credit union records, to demand a special meeting of the membership to vote on the removal of directors and to prevent credit union funds from being used to keep directors in office."
He said his clients are considering options as to how to proceed.