X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

ALEXANDRIA, Va. – Apparently it took only two rounds of letters between NCUA and the $1.8 billion DCFU Financial FCU for the agency to satisfy itself that the credit union’s proposed disclosure documents and ballots for its upcoming charter conversion vote met legal standards. The largest credit union in Michigan applied to change its charter to that of a mutual bank in December of last year. But the agency warned the CU against moving to the balloting quickly. In its March 1 letter to the CU, the agency outlined a member complaint about the conversion process that it had received and indicated that it had forwarded the complaint to the credit union’s supervisory committee for investigation. Although its March 1 letter to the $1.8 billion DFCU Financial FCU “did not disapprove” the credit union’s ballots and disclosure documents regarding the credit union’s attempt to convert to a mutual savings bank, the agency nonetheless suggested the CU hold off starting the balloting until after an investigation into a member complaint is complete. Linda Malec, a former chairman of DFCU’s board and spokeswoman for the DFCU Owners United group, a group of members who oppose the proposed conversion, had written the agency complaining DFCU leaders had made “incorrect and inconsistent” statements about the conversion and who stands to benefit from it. In its letter to the supervisory committee, the agency had questioned the plan to make members of the supervisory committee board members of the new bank, citing possible conflicts of interest. The CU should consider holding off from the conversion balloting because “if the inquiry into [Malec's] complaint reveals improper or inconsistent statements or actions on behalf of DFCU that need to be corrected through revisions to the member notices, it may be very costly and time consuming for DFCU if the notification process must be reinitiated,” Mark Treichel, NCUA’s Region 1 Director, wrote. NCUA urged the supervisory committee to hire outside counsel to help in its investigation, the results of which NCUA wanted to see in 30 days or roughly the end of March. The tone and questions the agency asked signaled that NCUA appears to be looking closely at any issues presented by the possible conflict of interest in the supervisory committee. In a letter to Suzanne Smulsky, chair of the CU’s supervisory committee, also sent March 1, Treichel asked the committee to report back on concerns about the integrity of the supervisory committee, any representations of insider benefits, reasons cited by the CU for the proposed conversion, whether DFCU leaders ever said that the CU could not speak about the conversion because of NCUA regulations, and the members’ resolution at the annual meeting that urged the board to withdraw the conversion application. “Did any member in attendance at the annual meeting move for adoption of a resolution to the effect that the DFCU board withdraw the proposed charter conversion?” Treichel wrote. “What was the exact wording of the resolution? Was the motion properly seconded, voted on and approved? Was it properly recorded in the minutes? Does DFCU plan to include information about this resolution with the notices it will provide to..members in connection with this vote?” The investigation could hold up the credit union’s progress to the vote and could spell trouble down the road if it is not handled with care, sources familiar with the process said. Meanwhile, the Michigan Credit Union League, itself being sued by the CU for what the CU has alleged has been improper interference in the conversion, criticized the CU’s apparent unwillingness to follow NCUA’s suggestions of what information to include in its disclosure documents. In its January 12 letter to the CU initially disapproving of its disclosure documents, the agency had made a series of suggestions about what, it said, the CU could do to help guarantee the transparency of the process. The league obtained NCUA’s Mar. 1 letter to the credit union which revealed the credit union’s disinclination to take NCUA’s suggestions through a freedom of information act request. MCUL CEO David Adams also noted the agency’s concerns about DFCU’s plan to add the members of its supervisory committee to the board of the new bank, should members approve the plan. “This NCUA request of the Supervisory Committee underscores the MCUL’s grave concerns regarding the apparent lack of open communication with members regarding this conversion attempt,” Adams said. “It also suggests concerns about possible misrepresentations made by the credit union regarding insider benefits.” Dissatisfaction about DFCU’s lack of communication about the conversion also came from the DFCU Owners United group. “It is very offensive that the largest credit union in Michigan and one of the largest and healthiest credit unions in the country is spending huge amounts of members’ money for a conversion without first seeking the endorsement of its members,” said Malec “Until the board of directors and executive management can clearly answer, and not in legalese, what benefits the members will receive we should all be very wary that our credit union is not being sold out from underneath us,” Malec said. The owners group said that a letter to the board of directors and supervisory committee questioning the conversion has still not been answered. In the past, CU leaders have suggested that NCUA regulations preclude them from answering questions about the conversion, but the agency has clearly stated that is not the case. [email protected]

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?

Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.