DEARBORN, Mich. — A candidate for the board of the $1.7 billion DFCU Financial has appealed for help from the NCUA in getting the CU to, in her view, abide by its own bylaws in a coming board election.
DFCU attempted to change its charter to a mutual bank in 2006 and faced a petition drive for a special meeting at which all or some of the board could be recalled. The CU withdrew the charter change application and refused to call the special meeting.
Linda Malec, former board chair and one of the board candidates arising out of the DFCU Owners United member group, which opposed the charter change and mounted the petition drive, wrote the agency seeking help not as much with the meeting problem, but with other ways she says the CU has been ignoring its bylaws.
"I see no recourse from the supervisory committee…" Malec wrote NCUA's Region 1 Director Mark Treichel in the Jan. 11 letter. "If DFCU Financial is allowed to continue its disregard for bylaws and the rights of members, they will have demonstrated that members are not the true owners, that bylaws have no significance and by default, NCUA has no role/no purpose," she added.
Malec alleges in her letter that the CU has ignored some of its own bylaws in the way it is administering the current board election in an attempt to disenfranchise members seeking to put new faces on the board.
For example, Malec said that the CU has paid "thousands of dollars" to advertise incumbent board candidates, which it backs, in Ford's in-house and other trade publications, which many of its members read. Challenger candidates cannot hope to match those resources.
She also alleged that the CU has provided the incumbent candidates venues in the branches to meet members and campaign while it has instructed CU security guards to order challenging candidates off the premises when they wanted to meet members at branches.
She also charged that the CU has sought to scare members away from challenger candidates by suggesting that only by voting for the incumbent board members can CU members protect their interests. "I urge you to view the election information for yourself (www.dfcufinancial.com) because I think you'll conclude that members cannot make an informed decision with incomplete information and without proper disclosure that bylaws permit a petition process by which the non-incumbents have qualified to be on the ballot," Malec wrote.
The credit union has not commented on the letter or what it alleges, but David Adams, a previous DFCU critic and CEO of the Michigan Credit Union League said some of the foundation for the dispute rests with the credit union industry and NCUA still needing to establish some guidelines for these disputes between CU leadership and members.
Adams pointed out that there is a disparity in Michigan between the relatively low number of member signatures required to hold a special meeting at which some or all of a federal credit union board could be recalled and the numbers required for a state chartered credit union. State chartered credit union members, Adams said, have to gather signatures from 10% of the CU's membership in order to petition for a special meeting. In DFCU's case, if DFCU had been a state chartered credit union, over 16,000 signatures would have been required to call the special meeting.
Adams said, on the other hand, that he agreed with the DFCU members who believed their credit union must follow its own bylaws and he lamented, in the face of a "non-enforcing regulator" that the only place for such disputes to go was to the courts.
He said the members were operating as they should by mounting board challenges, even though it may be that the cards are stacked against them.
"As Winston Churchill once said about democracy," Adams said, "I think credit unions are the worst form of democracy among financial institutions except for all the others. Even though no organization has perfectly fair election procedures, it is still easier for credit union members to play a role in their institution than it is for mutual bank depositors or stock bank shareholders." –dmorrison@cutimes.com
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