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The $1.8 billion DFCU Financial, Dearborn, Mich., wasn’t the first credit union to try to convert to a bank, nor will it be the last, but it more than any other conversion attempt has changed the rules surrounding conversions.

DFCU was villainized for not granting members a special meeting to remove board members even though the conversion opposition group had the required number of signatures under the CU’s bylaws. Credit union faithfuls were outraged that NCUA did not step in and stop this blasphemy. Wasn’t a special meeting the ultimate display of the democratic nature of credit unions? We later learned that NCUA got out of the bylaw enforcement game about 12 years ago when it removed bylaws from its rules and regulations. Of course that’s not the end of the story. NCUA later passed a reg outlining when it may get involved in bylaw disputes. That was a watershed change and it was driven by the DFCU case.

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