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As a chairman I have a concern to protect the authorities and duties of all credit union directors on behalf of their members. Wings actions with Continental’s membership seeking a petition for a special meeting to consider their rejected merger offer and deposit increase brings into sharp focus a practice which could undermine the traditional credit union philosophy of mutual support, cooperation, trust and assistance. If condoned the move to bypass the duly elected board of directors, operating within their authorities, undermines the role of all credit union directors. I believe failure of the credit union industry to examine and address the situation promptly will be a tacit endorsement and quickly lead to similar “copy cat” actions that will significantly endanger the credit union industry and quite possibly lead to its eventual demise. Failure to intercede only leads to an internecine struggle and bidding war between larger and smaller credit unions when an unsolicited merger and promise of a deposit increase is presented directly to the membership in an attempt to bypass the board and buy-out the equity of a credit union. The credit union membership is, of course, the ultimate authority concerning who and how the credit union will serve their financial needs. Their elected directors have a fiduciary duty to exercise that authority for their benefit. The directors have to have a wide amount of discretion to make timely policy and business judgments as the courts of law have recognized for businesses. If each such decision were vulnerable to a petition for a special meeting sponsored by third parties who have no responsibility, authority, obligation or duty to the members the board’s role is substantially eroded, the operational efficiency of the credit union is severely threatened and the cooperative nature of the credit union community will come to a rapid end. For these situations guidelines are needed to assure that credit union governance remains sound and operational anarchy is not encouraged. I fully realize that hostile takeovers are common among business entities. In such cases, however, there is generally a substantial return in shareholder value. I must, however, seriously question whether there is any substantial increase in shareholder value when hostile takeovers are permitted among credit unions. As it appears to me as a director, shareholder value is being eroded rather than enhanced in what is equivalent to a “wild west shoot-out.” At a minimum, NCUA has a responsibility to step-in and carefully examine the long-term effect of such practices upon the role (business judgments) of duly elected directors, credit union governance, the membership and the risk these changes may introduce to our cooperative industry and the share insurance fund. David Gilbert Chairman Aberdeen Proving Ground FCU Aberdeen, Md.

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