Michigan Credit Union League President Dave Adams last week said he and other credit union and legislative officials are asking the National Credit Union Administration to "intervene" in DFCU Financial's conversion attempt to ensure "more forthright and accurate statements are made to the public."
During a press conference in conjunction with the MCUL's GAC at the Radisson Hotel here, Adams said he was particularly concerned that DFCU officials gave false statements to the mainstream media about opportunities for insider enrichment.
For many, he said, a local newspaper article that suggested that officers and board members don't stand to gain anything from the conversion and attributed to Mark Shobe, DFCU Financial CEO, may be the only information members read about their CU's plan to convert from a non-profit credit union to a for-profit mutual savings bank.
"Officers and directors stand to make millions of dollars," Adams told a room of about 50 people. "Given the clear conflict of interest, it is incumbent that the officers and managers reveal...the truth."
In addition, Adams and others who spoke briefly, said they were calling on the NCUA to promulgate new rules so that consumers have a clear picture of how a conversion from a CU to a bank would impact them.
"If it can happen in Michigan, it can happen anywhere in the country," said Tony Carnarvon, CEO of Co-Op Services Credit Union. "I know that this isn't typical for a credit union CEO to ask for more regulations, but in this case, I do."
Adams said Carnarvon's CU was among a "dozen" credit unions that have given financial donations to DFCU Owners United, a members group opposed to the conversion plans.
"My credit union wanted to help those members in their self-education process," Carnarvon said, expressing his own frustration about the process that has included a self-imposed quiet period by DFCU Financial officials and the recent mailing of the disclosure packet rife with prize raffle offerings. "It's a raw deal. When you are a credit union member, you are an owner. When you are a customer of a bank, the bank owns you."
Adams said the league has not responded to a lawsuit filed by DFCU Financial Credit Union charging MCUL with interfering in the process.
"There is no sense of urgency to respond because there is no basis for the lawsuit," Adams said. "We believe it's just a publicity stunt. As the sole spokesperson for the league, I was not even named in the suit."
What is frustrating, Adams said, is that the CU is using its members' money to sue its own trade association and one of its own members-Alan Babcock, who is also SVP at MCUL.
While state officials did not attend the brief meeting, both Michigan Gov. Jennifer Granholm and State Sen. Ray Basham (D-Taylor) sent statements supporting MCUL's efforts to encourage members to carefully review disclosure information before they vote on DFCU Financial's conversion plan.
"As the governor, and a credit union member myself, I think that it is critical for members to weigh carefully the advantages and disadvantages of this proposal before casting a vote," Granholm said in a statement read by a representative. "I urge all of the DFCU members to carefully review the disclosures that will be mailed to you by the credit union in the coming weeks and months and determine for yourselves what is in the best interest of you, the members of the credit union."
Basham, a member of DFCU Financial since 1969, has been a vocal opponent of the plan and has expressed his own concerns about the process on a local cable television broadcast.
In a Feb. 14 letter to NCUA Chairman JoAnn Johnson, and read during the press conference, Basham stated, "I have grave concerns with this proposed conversion and what it might mean for my constituents that are members of DFCU Financial."
Like league officials, Basham said he was especially concerned about the "insider enrichment and the use of prize raffles, cash giveaways and other gimmicks" being used by DFCU Financial Credit Union to increase voter turnout.
Basham's representative told the crowd that he wanted to stress that he "will be voting NO" on the proposed conversion.
