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DEARBORN, Mich. – In less than a week, members of the $1.8 billion DFCU Financial who oppose the CU’s proposed conversion to a mutual bank were able to gather at least 1,300 signatures of credit union members who joined them in calling for a special meeting to recall the CU’s board. The credit union is about a month into balloting on its proposal to change to a mutual bank charter. DFCU members opposed to the conversion, along with former executives and CU board members, have formed the DFCU Owners United group to organize and focus their opposition. The group began by running advertisements in the local media questioning the proposed conversion and then began running ads, signed by as many as 200 credit union members as well as former executives and board members, opposing it. The group launched its petition drive at an April 4 evening meeting after a wave of supporters had urged an effort to recall the board, group organizers said. The relatively close-knit nature of the Ford Motor Company and affiliated organizations helped in the speedy effort by facilitating members being able to communicate about the petition drive, explained Margaret Blohm, one of the group’s organizers. One of the signature gatherers didn’t have to even leave his desk, Blohm related – Ford employees who were credit union members sought him out at his desk. The group will turn the signatures over to its attorneys to turn them over to the CU. Under its bylaws, DFCU Financial has 30 days after the receipt of the signatures to call for the special meeting. Even though the group has more than enough signatures already, the group said it will continue to gather them as part of an effort to inform members about the charter change proposal. The group held a press conference on April 11 to announce the collection of the signatures and drew representatives of both the print and broadcast media. The prospect of a recall effort appeared to heighten the story’s attention in the local press. The Detroit News, one of the two major dailies in the Detroit media, broke its silence on the story and began actively covering it. A News story, which ran April 11, quoted Mark Shobe, CEO of DFCU Financial, characterizing the leaders of the opposition groups as “disgruntled former employees” and calling the bylaws, which allowed the signature collection, “antiquated.” Shobe was quoted as saying, “You can get 500 people to sign anything,” adding, “that’s the scary thing about it.” DFCU Financial has 160,000 members according to NCUA. The piece represents the first time the News, has covered the controversy. The paper also quoted Linda Sherlag, 76, who was a 28-year employee of the CU who recently picketed the CU in the cold and rain because she was so upset at the proposed conversion. “I’m upset the way they handled this,” Sherlag is quoted as saying. “They never even told the members they were thinking about this until the ballot arrived in the mail.” The credit union has remained silent about the petition drive and has declined to return phone calls or e-mail asking for comments about the recall effort and its possible impact on the conversion balloting. The Owners United group said that it sought a meeting with board representatives in the wake of the petition drive but that they had been rebuffed and were told the board members were too angry to meet with any of them. The credit union has maintained that it is seeking to become a mutual bank to help it survive in a Michigan market which is coming onto troubled times, a suggestion that David Adams, CEO of the Michigan Credit Union League, has called into question. “We are witnessing the difference between banks and credit unions but in a different way. Credit unions often say that it’s the structure that justifies our tax-exemption,” Adams said. “Now we’re seeing that this structure difference also determines support or lack of support for strategic initiatives. The credit union structure here does not respond well to a `profit motive’ of moving away from an economically challenged Detroit market in pursuit of a bank charter. A stockholder-driven bank structure would accommodate such a value proposition. The credit union `service motive structure’ requires the credit union to continue serving as a credit union.” He also praised the members of the credit union who, he argued, have translated their dissatisfaction with the charter change process into action and organization. “Clearly this opposition group is disappointed with this badly flawed conversion process. Until the process is improved either by further regulation or by voluntary changes by credit union officials who attempt these conversions, we will continue to see this kind of angry reaction by disgruntled members,” Adams observed. “We saw it a few short years ago with Columbia Credit Union in Washington and now we’re seeing it again in Michigan, a state with an especially low tolerance for economic hardships being placed on middle class citizens.” -

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