No Help From Congress For DFCUOwners

WASHINGTON - (05/12/06) – Congress made it plain Thursdaythey won’t intervene in the contest between the directors ofDFCU Financial and their members, as lawmakers traded accusationsover who is responsible for the growing controversy over creditunion conversions. “There’s nothing we can do.It’s between the members and the board of the creditunion,” said one member of the House Financial ServicesCommittee at a break during Thursday’s hearing, of thestruggle between directors and a group of 2,000 members callingthemselves DFCU Owners United. Congressman Paul Kanjorski, D-Pa.,said he is convinced conversions have lined the pockets of greedymanagers and directors and speculators who prey on such financialopportunities. Kanjorski worries about what he called theincreasing move towards the "raiding of assets" of credit unionsand other non-profits by outsiders. "The reality is, any smartlawyer in this town can get in on the gravy train," he said. Butseveral committee members blamed NCUA for member revolts atprogressively bigger credit unions that management has tried toconvert to banks. Each of the previously three, Columbia CU,Community CU and OmniAmerican CU, has ended up in court, andthat’s where the DFCU case appears to be headed. Rep. PatrickMcHenry, R-N.C., who introduced the bill to ease the way to creditunion conversions, noted the two Texas cases where a federal courtfound the agency to have acted “arbitrarily and capriciously"and chided the regulator. He said it is the responsibility of thesavings bank regulator, the Office of Thrift Supervision, and notNCUA to police insider enrichment once the credit union becomes amutual savings bank. Representatives from the American BankersAssociation and America's Community Bankers also bashed NCUA,testifying to lawmakers the agency’s regulationsintentionally discourage conversions, by, among other things,restricting communications with members during the process. ButNCUA Chairman JoAnn Johnson insisted there are no regulations thatrestrict management's ability to communicate and NCUA did not tryto discourage DFCU management from explaining its position tomembers. "In no point of the process did NCUA restrict theirability to present communications with members," said Johnson. Rep.Spencer Bachus, R-Ala., the chairman of the subcommittee, saidthere will be no vote on McHenry’s conversions bill thisyear, but Congress will revisit the issue next year, in the nextCongress, after it sees new rules NCUA is supposed to pass bythen.