Members Turn Out To Oppose Conversion Bid

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Two-thirds of the members who turned out at the annual meeting of DFCU Financial here, which is seeking to become a bank, voted in favor of a resolution to the board that the conversion bid be withdrawn.

But many of those same members, who attended the gathering at the Ritz-Carlton Hotel here said they expect it will fall on deaf ears.

"A lot of questions were asked but the responses were superficial and had a lot of factual mistakes," said Linda Malec, DFCU board member from 1980 to 1999, and spokesperson for a group newly formed to fight the charter conversion called DFCU Owners United. In addition, direct questions about the impact of the conversion on members and the stock opportunities that would become available for board members were not adequately addressed, she and others said.

DFCU officials declined to comment by deadline.

The media was excluded from the gathering, but sources inside said the majority who spoke during the session that lasted just over two hours opposed DFCU's plan to convert the 56-year-old CU founded for Ford employees to a mutual savings and loan bank.

Members Ask Why Attorney Is Present?

Mark Shobe, president of DFCU, and Board Chairman Harold Lowman officiated the meeting with assistance from Attorney Jim Fleischer, of the firm Silver, Freedman & Taff, L.L.P., which is representing the credit union in its conversion bid. Fleischer, who is not a member of DFCU, was asked to leave by one member who said officials made it clear this was a "members only" meeting and allowing only registered members into the session. Fleischer said he was there to help.

Sources said that Shobe told the audience that this proposal "to change the legal structure" would offer the financial institution "more flexibility to prosper." When a member asked, "What's the negative," Shobe responded, "We pay taxes."

In its application papers, DFCU explained that the major reasons for the conversion were to diversify DFCU's membership, raise capital through a public offering, and process more small business loans.

NCUA is reviewing paperwork by DFCU Financial after rejecting its first proposal in January. According to documents obtained by CUNA, the NCUA wrote a 12-page rejection letter that, in part, disapproved of proposed methods and procedures related to the conversion plan that included board enrichment opportunities and multiple $5,000 cash prizes to spark voter activity. The letter's author, NCUA Regional Director Mark Treichel, also questioned disclosure methods and criticized the ballots for failing to include "bank" references.

The DFCU has responded to the letter but, according to DFCU officials, said there were concerns they did not agree with and couldn't satisfy. NCUA has 30 days to make a ruling on DFCU's response.

If approved by voters and regulators, this conversion will be the largest of its kind in the U.S. In 2004 in Michigan, another billion-dollar CU-Lake Michigan Credit Union-failed to garner the two-thirds approval of voters that is required of state-chartered CUs under Michigan law. LMCU used a similar marketing approach -prize raffles that included a new car lease-to drive voter turnout.

Because it is a federal credit union, DFCU needs only a simple majority by voting members to allow the conversion.

When members of DFCU's annual meeting asked about member voting rights as a savings and loan, Shobe explained that each member would have one vote per $100 up to $1000. "In substance, it doesn't change a thing," he said.

One member retorted that as a credit union, it's one member, one vote, period."

Malec said it took four requests before board members, who had been sitting throughout the audience, would move to the front of the room where they could be seen and heard. Even then, she said, most questions directed to specific board members were answered by Shobe.

Donald J. MacKinnon, 87, who helped organize the credit union and was its first full-time manager from 1953 to 1981, appealed to the directors to withdraw their conversion proposal and then asked for a vote of those in attendance.

"We don't need another bank, we need a credit union," sources said he told the crowd.

The motion in which he recommended to the board that the application to the NCUA for charter conversion be withdrawn passed after three counts-by voice, by a show of hands, and finally, by members standing and counting off. The outcome: 70 supported MacKinnon's motion, 36 were against it.

Malec said board members tried to slip in their own votes as well, but were reminded that they couldn't vote on a motion directed to them.

After the meeting, MacKinnon said he didn't expect the CU's board to act on the recommendation but wanted them to know how the members in attendance felt about the issue.

Last December, the $1.8-billion DFCU announced conversion plans, but has provided few details since informing employees of its decision on Dec. 14.

Several long-time members said they had no idea prior to the meeting about the conversion and were shocked by the line of questioning.

"I've been very happy with the credit union," said Thelma Chaussee, one of DFCU's charter members. "I don't have any issues."

She described President Mark Shobe and another spokesman as "fine, quiet people" who were "put through the ringer" by angry members.

Chaussee was among a handful of members leaving the meeting who said they would wait for DFCU's disclosure packet to provide them with the information they would need to determine how they would vote. Officials said they should be receiving those packets in the next 30 days.

Others, like 26-year member Don Johnson, said their minds were made up. "Five and 10 years ago, we were writing letters to Congress and senators to get the bankers off our butts and now we want to be one of them," Johnson said. "I will vote 'no.'"

Johnson was among many who said they opposed the conversion but had only positive things to say about the credit union "The reason I came to DFCU was because I was treated so badly by banks," he said. "It's been wonderful."

Of course, he added, he had to wait until 1965 to become a member because the CU did not allow African-Americans to join until then. "If the credit union was losing money and in trouble, I could understand it," he said of the conversion plans. "But, it's not. I just want them to stay a credit union."

Eric Gubka, 32-year member, said he felt "smacked in the face" by late-breaking news of the conversion and wanted to know how the members would benefit from the conversion.

After the meeting, Gubka said, his question still had not been answered.

Former DFCU employee Bob Haisen said he became aware of DFCU's plan when they changed their name from Dearborn Federal Credit Union to DFCU Financial, then changed their web address from a to, and more recently changed from a credit union to bank routing number.

Haisen's response to it all. "Go to," he said.

Website Gets Hits

The website is part of DFCU Owners United campaign to oppose the conversion. In addition to tips on how to make an informed decision about charter conversions, the site includes a link to the Michigan Credit Union League's website,, which provides information about charter conversion. The MCUL site was launched as part of a member awareness campaign during LMCU's conversion attempt.

In the first week of its launch, received 2,000 hits and 25 e-mails expressing interest and support and asking for more information, said Delores Gariepy, former VP at DFCU and member of DFCU Owners United.

Malec said the group of about 40 people that formed last week hopes to gain fast support for their cause. "We want people to know this is a consumer issue," Malec said. "We need publicity, we need volunteers, and we need funding."

Prior to the meeting, Kim Gabbert, director of Public Relations at DFCU, said she was surprised that the annual meeting was even newsworthy. "At this juncture, there's really nothing to tell," she said. "We've filed the paperwork with the NCUA and we're waiting for a response. End of story."

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