DFCU Fight Gets More Attention in Area, Members Group Meets With Lawmaker

DEARBORN, Mich. – The simmering controversy over whether DFCU Financial FCU will or will not become a mutual bank started to bubble a bit more vigorously last week. One of Detroit’s major daily papers covered the story on the front page of its business section and DFCU Owners United, the group of DFCU members opposed to the conversion, began to grow in the wake of the story and the annual meeting. The story, which ran in the Feb. 18 edition of the Detroit Free Press, quoted DFCU Financial CEO Mark Shobe about the credit union’s desire to expand beyond the Detroit market and his allegations that the only reason the Michigan Credit Union League is questioning the conversion is to protect its membership base and income. The story also quoted David Adams, CEO of the MCUL, as commenting that the credit union leadership’s reasons for becoming a bank “ring hollow” and that the area needed a credit union, not another bank. “Credit unions grew out of the Depression. They exist to serve working-class households. It’s the worst time to abandon a credit union charter and be a bank,” the paper quoted him as saying. Linda Malec, spokesman for the member’s group and a former chairman of the credit union’s board of directors said she was heartened by the Free Press story and that thousands of DFCU members had begun to visit the group’s Web site at www.savemycu.com. “I am extremely concerned about the recent application, approved by current directors, to convert to a mutual savings bank,” she said. “And I am even more concerned about the lack of communication from board members and executive management to members.” Over the course of weeks, and particularly at the credit union’s annual meeting on Feb. 15, Malec said members had pressed the credit union’s leadership about how credit union members would benefit from the conversion and whether they, as insiders, would unduly benefit from the issuance of stock. In almost all cases, Malec reported, the leadership declined to answer the question and blamed NCUA regulations for not allowing them to do so. But NCUA General Counsel Bob Fenner said such a contention from the credit union is “simply false” and there is nothing in NCUA’s regulations that would preclude a credit union’s leadership from talking to the CUs members about a charter conversion. “To the contrary, NCUA would favor a credit union answering questions from its members about a conversion application,” he said. Fenner also said it was “egregious” and “outrageous” for a credit union to blame the NCUA for not talking to its members about a major change in their credit union and commented that “if this is supposed to be something which benefits members, it’s reasonable to ask why they aren’t more willing to say more about it.” For its part, DFCU Financial continued to decline to take calls from the press about the matter, though DFCU CEO Mark Shobe did give an interview to the Detroit Free Press for its story and has reportedly given an interview to Detroit’s other major daily, the Detroit News. Afterward, Adams said that he thought it was good that a conversation has been started and that the credit union leaders have chosen to be public about why they want to become a bank. “I think it’s good that there are now reasons out in the open that people can chew on and talk about,” he said. Meanwhile, the bubbling controversy had begun to draw the attention of federal lawmakers as well. Shobe told assembled DFCU members at the credit union’s annual meeting that the credit union had hired Washington lobbyists and confirmed that he had been to Washington to lobby them. But lawmakers hadn’t just been hearing from DFCU’s leadership. Malec confirmed that DFCU Owners United had met with Congressman John Dingell, the Democratic representative from whose District includes DFCU Financial and a longstanding power in the House or Representatives. Although Dingell doesn’t sit on the Financial Services Committee, he is the ranking member on the Energy and Commerce Committee and is serving his 26th term in the House where he is widely considered a formidable force. Malec said that Dingell had been very interested to hear about the conversion and had given the group a lot of time to explain their concerns. The next steps in the ongoing controversy from the credit union’s side appears to be the eventual NCUA approval of the credit union’s disclosure documents and ballot which will then go into the mail, likely sometime in the middle of March. For its part, DFCU Owners United will continue to network among DFCU members, particularly at Ford, and has begun to investigate ways to contact DFCU members in other states. [email protected]