<p>ALEXANDRIA, VA – Jan Roche, CEO of the $240 million United States Senate Federal Credit Union, hopes that a recent compromise will be enough to calm a recent controversy on its board in time to prevent the credit union having to call a special meeting to resolve the matter. “In light of the recent compromise I would hope we can avoid having to send notices about the meeting to 30,000 members, most of whom will likely not have followed the controversy and will need to have it explained for the first time,” Roche said. The brouhaha has involved a petition circulated among the credit union’s members calling for a special meeting to recall six of 11 board members who had voted to expand the membership of the board from 11 to 13. A seventh board member, named in the petition, and who could have been included in the recall, has resigned. Under the compromise, the two board members who benefited from the expanded seats have resigned and the board size was reduced to 11 once again. Roche hoped the board reduction would put an end to the controversy in part because she believed the petitioners circulated their petition primarily to draw the board’s attention to their displeasure over the board expansion. Under the bylaws, members can only elect or recall board members, she noted, and she did not believe the petitioners intended to recall over half of the credit union’s board. Two of the members who had helped facilitate the petition were present at the announcement of the compromise and backed up Roche’s impression. In a press release issued at that time they said they were both “pleased by the compromise” and were of the opinion that “the underlying reason for the petition” had been addressed. Currently 200 signatures are required to call a special meeting and the petitioners have 350 signatures, according to the credit union, but in part because of the compromise resignations, lawyers for both the petitioners and the credit union have been meeting to see if the meeting can be avoided. The credit union remained uncertain as of press time whether the special meeting would need to take place or when. If the board members are recalled in the meeting, the bylaws call for remaining board members to choose new members to serve until the next annual meeting or the board members can choose to shrink the size of the board to five, Roche explained. On March 27 the Board expanded its size after a close election would have resulted in the loss of two experienced members, including the board’s sole attorney, according to credit union sources including a resigned Board member. “In response to the voter turnout and to the closeness of the results, the board decided to expand the number of seats from 11 to 13 to ensure that all of these voting constituents would be represented,” a Senate FCU press release said at the time. But in addition to including more experienced members, the board found it had also sown controversy for itself as the member petition calling for the special meeting emerged at the end of April. Because phone calls to petition supporters remained unreturned as of press time it is difficult to report a definitive account of what drove the controversy, but an examination of existing Senate FCU publications and accounts that have appeared in the general press, along with former credit union board sources, suggest two issues previous to the election helped fuel the disagreement. First, there was an issue about the election process. In September of 2001 the credit union’s nominating committee finalized a policy change. Previously, someone nominated for a position on the board had to have some legal or financial background or two years experience serving on a credit union committee. In September, the nominating committee, without needing board approval, changed the criteria to make the experience serving on the credit union board mandatory. Some interested in serving on the board appeared to view the change as a measure meant to restrict challengers, even though sitting Board members denied this, and some of this concern may have led to a record number of candidates mounting their candidacy by petition. At the March 27 meeting there were 11 candidates for five board seats; five incumbents, one candidate nominated through the traditional process and five nominated by petition. Second, there had been a number of controversies on the board, which had left some measure of residual frustration and perhaps some bad feeling, according to both Normandie Peterson, one of the former board members who resigned as part of the compromise and published press reports. One of the controversies involved Roche’s hiring. According to Peterson and other credit union sources, the former board chairman and another board member had advanced the Chairman, Tom Gonzales, to be CEO only to have the majority of the board reject him as being insufficiently qualified. In the end only two votes could be found in support of Gonzales and Roche was hired instead. This left some residual bad feeling within the board, according to Peterson. The second debate that spurred more bad feeling arose after one of the board members, David Shunk, who serves on the staff of the Senate Rules and Administration Committee, proposed several times that the credit union issue senators and top aides credit cards for their use in travel, similar to the credit cards issued to other government officials for use in their official duties. According to Peterson, press accounts and credit union sources, Shunk raised the issue a number of times, even after the board explored the possibility and concluded the credit union lacked the staff or the resources to undertake that project. Currently Bank of America provides the Senators’ cards and has a similar program for military officers and Pentagon officials. That program was the subject of scandal earlier this year when the inspector general discovered some of the military accounts had been used to make nonmilitary purchases and Bank of America complained that a significant number of accounts were delinquent. None of those accounts were credit union accounts because the military credit unions can only issue personal credit cards to their members, not organizational or business cards. When asked about the seeming regulatory barrier to Shunk’s plan, Roche reported that the credit union had not investigated the matter at the level having concluded that, allowable or not, the credit union remained too small for the program. Shunk has been reported in the general press as having urged colleagues to run for the board by petition and as helping gather signatures for the petition, including via the Senate’s email. Shunk had not returned phone calls as of press time. Whether the controversy dies down or not, credit union sources agree that it has served to muddy the name of the credit union at a time when it could otherwise be celebrating coming through some difficult times. After the anthrax scare, which included the complete closure of one of the Senate buildings, the credit union has still managed to attain a return on average assets of 1.19%, .31 over its peer group, according to NCUA. [email protected]</p>

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