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This week’s announcement by DFCU Credit Union’s officials put an abrupt halt to the largest bank conversion ever attempted. The “power of one” began with one member who sought advice and direction on how to form an opposition group. She helped form a group that would later be accused of being “just a few disgruntled employees.” They became what Marv Umholtz of the Coalition for Credit Union Charter Options described as, “a few anti-conversion extremists.” In an April 7 news release, Marv (ironically a former Michigan League executive), now the membership director for the CCUCO, described these members like this: “There is no doubt in my mind that this is a very small, but noisy anti-conversion advocacy group, not an education-focused effort as they initially professed to be,” Umholtz observed. “My general impression is that this marginal group is being led by a few disgruntled ex-employees of DFCU Financial, supported by some long-time credit union members with fanciful notions of what constitutes credit union membership and a muddled interest in preserving the status quo,” continued Umholtz. “It’s the 21st Century now, not 1950.” To paraphrase Dave Chatfield, “I can’t think of anyone less qualified than Marv Umholtz to advise credit union members on how to vote on a bank charter conversion.” Is it any wonder that the DFCUOU group was verbally abusive when he tried to advise them? The power of one was also exhibited by 76 year-old Dearborn Heights resident Laura Sherlag. She may have been the only DFCU member protesting at a DFCU branch on a rainy day on April 10th when Detroit News reporter Joel Smith arrived on the scene. A picture of Ms. Sherlag holding a sign: “DON’T MAKE OUR CREDIT UNION A BANK!” was held high on the front page of the Detroit News business section the next day. Her comment spoke volumes: “They never even told the members they were thinking about this until the ballot arrived in the mail.” Was she one of the few disgruntled employees with a muddled interest in the status quo? Or was she emblematic of the 2,000 petition signers who represented the thousands of “No” votes streaming in to the credit union?” Perhaps Marv was referring to the DFCU member quoted by the Detroit Free Press on April 18th: “How can organizations like the Coalition for Credit Union Charter Options (Marv Umholtz and Lee Bettis), CU Financial Services (Alan Theriault, et al) consistently get it so wrong and still be invited into credit union board rooms? Their demeaning references to credit union heroes like the members who stood up and opposed the DFCU conversion should disturb all of us.” DFCU Owners United fought against the $1.2 million spent by the credit union on attorneys, PR consultants and telemarketers. They ignored the abusive and demeaning attacks on them by the Coalition for Credit Union Charter Options. They cringed as their credit union officials made misleading statements about member ownership, branch access and insider enrichment opportunities while blaming the NCUA for the credit union’s self-imposed quiet period. As they demonstrated peacefully in the cold at credit union offices, their numbers grew and so did the admiration of their many supporters until credit union officials acknowledged defeat. The industry can learn much from the DFCU conversion attempt. Among these lessons: 1. Members ARE what make credit unions different. We all work for them. They are the owners of the movement. When they are unhappy, nobody in management or on the board will be happy. This not-for-profit, member-driven structure is why credit unions are tax-exempt. The structure is also why bank conversions will be next-to-impossible to pull off anytime in the near future. 2. Credit union associations, credit unions themselves and other credit union organizations should unite against a common enemy on the conversion issue. Bank charter conversions are NOT good for the credit union movement. The option may need to exist as a last-resort safety valve in the event bankers succeed in the “contain” part of their “contain and convert” strategy. But any support for an easy, secretive, fast-track conversion process is an attack against member-owners like the heroes of DFCU Owners United. 3. Organizations like CU Financial Services (Alan Theriault, et al), the Coalition for Credit Union Charter Options (Lee Bettis and Marv Umholtz and their bank advisory board), state bankers associations, the ABA and the ICBA are all THE ENEMY. Credit union leaders should stop inviting these people into their board rooms! The CCUCO should not have “credit union” in its name any more than the ABA should be renamed “American Bankers for Credit Union Charter Options”! By contrast, the National Center for Member Trust needs annual financial commitments from CUNA, state leagues, credit unions and credit union organizations. Let us support our friends and work against our common enemies! 4. This industry should stand firm in its support for the National Credit Union Administration. Chairman Johnson, the NCUA Board and NCUA staff have stood up against all of their critics. Under threats of lawsuits, they came through for the members. They worked within the letter and spirit of the law providing much-needed protection for DFCU members’ interests. The agency now needs our assistance in telling the whole story about conversions to Congress. Only five bank conversions have been attempted in the past five years. Three of the five have failed. Credit union board members have lost their positions and had their reputations damaged by angry member recall efforts. CEOs have lost their jobs. Yes, two have succeeded in Texas. But would those conversions have turned out differently in today’s environment with the existence of the newly formed National Center for Member Trust, the almost daily stories about post-conversion windfalls for boards and executives, and with newspapers like the Washington Post opining against conversions?! The biggest lesson learned from the inspiring work of the DFCU members is that the credit union idea is alive and well. Bankers will fail in their quest to “contain and convert.” Our opponents are irrelevant if we are strong in our values. As all of the letter writing, and debate on bank charter conversions was taking place during the past four months, a small group of our member-owners reminded us whose opinions matter most. They also buoyed our confidence in the future of the credit union movement. Thanks DFCU Owners United!

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