"Given the economic impact of this war, this is not the time to affect the
savings and loan rates of members who are serving in Iraq," said Tom Carter,
a member of Lafayette FCU opposed to its planned conversion to a mutual savings
bank and then a stock-issuing, mutual holding company.
Raising the harbinger of the war in Iraq shows the depth of the emotions the
proposed conversion brings out in at least some of the CU's members.
"US AID employees are working on the reconstruction effort in Iraq; they do
their online banking, pay their mortgages, bills and loans remotely, and they are
not aware of what's going on back home with their credit union. It's a crime,
" Carter said, adding, "I don't think they'd want their credit union
stolen while they're serving their country."
Carter cited a study of already-converted CUs showing that rates for loans go up
while dividend rates drop, and said that would likely happen despite LFCU's
pledge. Carter and Scott Steins, who both work at US AID, have added their names
to nine other opponents, forming the core of a group that includes LFCU's former
CEO Bill Brooks.
The group sent a letter to the CU's board asking for access to board minutes,
paperwork and documentation, PowerPoint presentations and any related material
associated with the conversion. They don't expect LFCU to promptly comply, except
through an attorney, and they don't expect the answer to be in the affirmative,
either.
Networking Efforts
"We're networking as much as possible," said Steins, who said he was a
true believer in the cooperative structure, particularly as an alternative to
organizing economic activity. "I've been a CU member since 1975 and I
believe there are advantages to remaining a credit union. But the greatest single
advantage we have is our ownership and the role we play in how our CU serves us."
Since Steins was quoted in a Washington Post story, he said he's received many
calls and e-mails from members. "Just at US AID, I think a straw poll would
find 70% opposition. I've no idea how members at the SBA or Peace Corps might
feel."
The group is trying to reach members through chain e-mails and notices hung in
the workplace in an effort to make them aware of what is at stake. "Some of
us met with (LFCU CEO) Michael Hearne to ask questions but they were not fully
answered."
"We asked them a while back for the CU bylaws and they were reluctant. I
mean, we have to abide by them, why can't we see them?" asked Carter. "
They complied, but it took two weeks. I think their strategy is to delay."
Both believe that the reasons cited for the conversion are baseless, and the
eight-page letter, found at
www.ncba.coop/savemycu/LFCU-MemberLettertoDirectors.pdf offers a
point/counterpoint review of the positions offered by the CU, including member
business loans, branching, services and rates.
"Their reasons are fallacious. This conversion gives them the opportunity
for personal enrichment. They have a serious conflict of interest and may be
denying their fiduciary duty to members," said Carter. He related that at
the meeting with Hearne, a member asked him, "What's wrong with the credit
union? Is there a reason to encourage this move? He wasn't satisfied with the
response, and in the end came away saying, "If it ain't broke, don't fix it.
"
Inconvenient For Members
Carter noted that giving up free branches in federal offices and relocating them
would be costly and inconvenient for members. Steins said that LFCU member
business loans are such a small part of the portfolio that to say a conversion is
required to expand them is ridiculous.
They are glad to see a meaningful opposition percolate through the membership and
expect that the attention paid to the conversion by a member of Congress, Rep.
Eleanor Holmes Norton helped to raise awareness.
"The law requires three mailings prior to the vote," said Steins.
"They sent the ballots out with the conversion documents in the first
mailing. I believe they did that to prevent any opposition from getting an oar in
the water first."
© 2007, Used with permission from The Credit Union
Journal. All rights reserved.
