Conference 7.286::dcu

    
    The meeting lasted from 5:30 until 8:45.  There were maybe 20-30
    members there.  All DCU senior management were there.  All BoD were
    there with the exception of Dan Infante.
    
    One other person was there too.  He was a lawyer for the law firm which
    DCU has hired to go after Mangone.  He was supposed to be there to
    answer questions concerning those suits.  Instead he spoke several 
    times when questions were addressed to the BoD concerning their
    approval of the participation loans, the process of how DCU acquired
    them, the lack of independent verification, etc.  I found this HIGHLY
    inappropriate behavior on his part.  He was not there to defend the
    actions or inactions of the BoD.  At one point I had to ask him to
    stop speaking and let the people who I addressed the questions to,
    answer the question.  If he shows up at the next meeting, I will pay
    particular attention to making sure he speaks only on the subject he is
    there for.  Count on that members of the board of directors.
    
    I have very distinct impressions concerning the meeting.  I will post
    them later.  Bottom line was no board of director member would come out
    and say that they made as mistake concerning the participation loans. 
    The exchange of conversation and verbal double speak when this
    admission was attempted was the highlight of the meeting.  I certainly
    left there with the impression that they feel they did nothing wrong. 
    They are certainly hanging together on this one.
    
    A personal highpoint was hearing BoD member and DCU Treasurer say she
    stood by her statement in the 1990 Annual Report which stated the DCU's
    financail performance had improved and was on target.  All this when 
    net income dropped from $3.3 million to $290,000.  So when DCU's net 
    income drops 10 fold again to $29,000 will we have another banner year?
    Absolutely, positively incredible.
    

    
      I wasn't there,  but IMHO,  having the lawyer represent the
    BoD   doesn't strike me as particularly improper.  Nor does
    their failure to admit "Wrongdoing"  in the case of the 
    participation loans.  
    
      Consider that any admission of negligence or wrongdoing
    by the BoD themselves  would only serve to weaken their case
    in the Mangone Litigation (Where they are attempting to show
    that he and he alone acted improperly.)
    
      At this juncture,  I'd be most interested in knowing the 
    exact financial state of the credit union,  and its future
    loss projections, rather than  attempting  to force public
    confessions of negligence from the directors themselves.
    Once the financial information becomes public,  it is for
    the members to decide whether the BOD has served them well
    or not.
    
    
    					-al
    

    The lawyer was a good idea for whom?  The BoD or the shareholders?
    The interests of the BoD and the shareholders are supposed to
    coincide, but I'm wondering about that a lot these days.

    
    RE: .2
    
    The lawyer was NOT there to represent the BoD.  He was there to answer
    questions pertaining to the Mangone case.  Instead he started answering
    questions such as if was normal for an institution to verify the
    paperwork which it is given when granting participation loans.  I
    certainly hope the BoD doesn't need a lawyer.
    
    At this time I would like to call on the DCU to hire an independent
    consultant to evaluate the DCU financial stability and make a judgement
    concerning the statements issued in the 1990 DCU Annual Report by the
    BoD.  Did they accurately reflect the condition of the DCU?  Was
    significant financial information NOT disclosed.  In particular,
    $2,696,000 in losses on the participation loans.  This valuable and
    significant piece of information was obtained in my examination of the
    full auditors report for 1990.  It is part of the auditors notes which
    DCU does not include in their public statements and was completely
    omitted in the statements from the Chairman of Board and the Treasurer.
    But the auditors thought it significant enough to call out.  But hey, 
    what's a million or two, right?
    

    The following are not "minutes".  I'm providing a few impressions (for
    the benefit of those who couldn't attend) and some additional comments
    (I had to leave at 7:25, so I didn't get a chance to say them -- I hope
    the BoD members will read them here).
    
    First off (despite the short notice), I'd like to thank the BoD for the
    opportunity to see them in the flesh and hear their points of view
    (though not all were actively engaged in the discussion).  Despite some
    aspersions that have been cast in this VAXnotes conference, they're NOT
    ogres.  On the other hand, I don't believe they're particularly
    representative of the DCU membership (there were NONE that I could
    identify as representing the field, engineering, or manufacturing
    constituencies).
    
    I think the BoD did a reasonable job of justifying the need (if not
    the form) of the announced fee increases.  They acknowledged that the
    "Henry Ford" glossy insert had caused a storm of comments and therefore
    must have been a mistake.
    
    At a couple of points, members of the audience pressed Mark Steinkrauss
    to acknowledge BoD responsibility for the $18 million in participation
    loans (more later, on that).  His defense was that the BoD acted in
    good faith on the information (fraudulent though it was) at hand.  I
    take no issue with that; what was wanted was for the BoD (Mark S, in
    particular) to acknowledge that "the buck stops here".  (Frankly, I
    don't think it's in his make-up to make such an admission.)
    
    We asked for, and received, status on the $18M in participation loans. 
    DCU's claim against Mr. Mangone's surety bond (insurance against the
    type of malfeasance with which he's been charged in this fiasco) is
    uncontested, so DCU expects to collect close to the full $6M (the
    policy limit) within a few months.  The properties that secured the
    loans (and for which Mr. Mangone arranged additional fraudulent
    appraisals to back up the original paperwork) are likely to fetch $4M
    or so in foreclosure sales.  Part of the remaining $8M will be offset
    by whatever DCU can collect in its suit against Mr. Mangone.  The
    remainder will be a write-off.
    
    Mr. Steinkrauss' opening remarks mentioned that the BoD has been very
    interested in the results of member surveys.  Members demand SERVICE
    ahead of almost everything else.  In the next breath, he equated that
    service to a far-flung system of local branches.  I think they have
    missed the point.  Indeed, many DCU customers value the convenience of
    a local branch or ATM very highly.
    
    THAT, however, ISN'T what the credit union movement is about.  Credit
    unions are PEOPLE who have something in common (in the DCU's case, the
    field of membership is past/present employees of Digital Equipment Corp
    and of DCU, itself).  We form credit unions as an extension of that
    common bond.  They are non-profit and (hopefully) low-overhead
    operations, which should give them an edge over commercial banks with
    regard to interest rates.
    
    MORE IMPORTANTLY though, the credit union should treat its members in
    a way that encourages members to turn to the credit union FIRST for as
    much of their financial business as the credit union is able to handle. 
    The DCU is sadly lacking in this respect.  While individual employees
    attempt to be friendly and helpful, they're unable to shield members
    from a ponderous set of procedures that are regularly (and frequently
    incorrectly) attributed to the NCUA, bylaws, and other "authorities". 
    I feel a basic sense that the DCU doesn't care whether members put
    their funds (and trust) in it.  If the DCU wants my business, it must
    find ways to meet MY needs rather than forcing me to meet THEIRS.
    
    Consider the neighborhood or small-town bank.  Though the economies of
    scale favor large bank holding companies with far-flung branches and
    networks of ATMs, local banks continue to prosper.  Why?  Could it be
    that the local bank is more willing to "take chances" on the people it
    serves?  Could it be that the local banker (who actually has to live
    with his customers) has a vested interest in the success of more than
    just the bank?  Why should DCU be any different?
    
    This whole point seems to be lost on the present DCU BoD (and as a
    result on the operations of DCU).  We don't want DCU to be just another
    bank.  We want it to be our FIRST CHOICE, offering competitive rates
    (which the BoD insists the DCU does, though many counter-examples have
    been offered) and a REASON for doing business with them.
    
    Many members cite "convenience" and "free checking" as the reasons they
    use DCU.  That means the DCU has ALREADY FAILED in its mission.  How
    many people can claim that "they worked with me to arrange financing
    for ..." or "they took a chance on me ... and I'm grateful"?  DCU's
    field of membership isn't growing, so it's PENETRATION into that field
    must.  That means the DCU needs to mend its ways.
    
    The BoD doesn't set day-to-day procedures, but they DO set the tone for
    the organization.  The immediate emphasis should be QUALITY OF SERVICE. 
    That includes QUALITY OF COMMUNICATION, which I'll get to shortly.  For
    example, DCU's funds availability policy is the MOST RESTRICTIVE
    allowed by law.  That tells me that DCU doesn't trust its members and
    it encourages me to deposit my funds at BayBank (where $100 is
    available immediately and the rest the next day for deposits under
    $5000) rather than wait 3-5 WORKING days.  I simply DO NOT BELIEVE
    that there's such a high instance of bad checks that this is necessary.
    
    Next, try to get a loan from the DCU.  When last I refinanced, my
    lender SOUGHT ME OUT (knowing the rates had dropped enough that I was
    probably looking to refinance anyway) and MADE IT SIMPLE.  In addition
    to the standard application form, they only wanted copies of our pay
    stubs and two months' bank statements instead of all the verification
    forms needed by the original lender.  They guaranteed 5-day turnaround
    on the loan decision and allowed me to lock in (effectively at no cost
    -- the point was applied at closing) the then-current 8.625% APR.  Can
    ANY member of DCU make a similar claim?
    
    Whether or not the BoD had a direct hand in the new fee schedules, it
    is ultimately responsible for them.  I have a few specific complaints
    that may/may not echo other comments made elsewhere in this conference. 
    We intentionally avoided drowning in the fee-schedule rat-hole.
    
    1.	As I tried to point out at the meeting, the new checking "options"
    	don't fit the membership.  There are 88,000 of us.  How can these
    	two choices possibly apply to all?  People without direct deposit
    	have absolutely NO way to get fee-free checking, regardless of how
    	much money they have on deposit.  That's incredibly stupid!
    
    	SIMPLE SOLUTIONS USUALLY AREN'T.  FLEXIBILITY IS PARAMOUNT.
    
    2.	The new fees don't encourage members to take out loans, which is
    	the DCU's only real way of making money.  Why not?
    
    3.	The extra features on the Checking-Plus accounts are of variable
    	value.  Two months (possibly renewable) of buyer protection plan
    	is meaningless to me -- I'd rather save the premium cost for
    	something that matters.  In light of my hoped-for change in DCU
    	attitude, how about making it easy for EVERYONE to get $500 in
    	overdraft protection?
    
    4.	Many of the fees are PUNITIVE.  (Heaven forbid the DCU should have
    	to deal with anything out of the ordinary!)  I can't believe they
    	reflect the actual costs of performing the services in question.
    	More importantly, they work AGAINST the concept of providing high
    	quality SERVICE to customers.  If overdraft protection were to
    	become a standard feature on checking accounts, then customer
    	slip-ups would be MUCH less tense.  Customers would quietly pay off
    	the overdraft and interest and be thankful that the check hadn't
    	bounced.  As it is, embarrassed/angry customers are likely to get
    	into "pissing contests" that cost the DCU both time and goodwill.
    
    I'll close with a comment on COMMUNICATIONS.  Mark Steinkrauss pointed
    with justifiable pride to the letter to all members that he sent out
    shortly after the Mangone firing came to light.  It was a refreshing
    change to the type of stuff we usually receive and I had every hope
    that it meant some fundamental changes had taken place.  My hopes were
    dashed by the "Choices" brochure, which was more in keeping with what
    we've come to expect.
    
    I would LIKE to be treated by DCU as a respected PARTNER in our
    particular financial arrangement.  Instead, the DCU presents itself as
    just another megabank that views me as part of the great "unwashed" and
    acts accordingly.  We attempted to deliver this message (in one way or
    another) repeatedly in the meeting, but I STILL don't think the BoD
    appreciated what we were trying to say.

re .5:

You seem to be arguing that "taking a chance" on members is good, but taking
a chance on participation loans is bad.  It's obvious (now, anyway) that the
"chance" taken on Mangone was a very bad idea, but I'll argue that in order
to provide loans at a low interest rate and savings at a high interest rate,
DCU should only provide loans that are rock solid.  If a member has to get
a loan from the Neil Bush Savings & Loan, so be it.

    
    RE: .6
    
    There is a BIG difference between lending money to members, who have
    traditionally had an extremely low delinquency rate, and lending money
    to trust companies for real estate speculation.  Let's not mix these
    two very different issues becuase there is absolutely nothing in
    common.

    
    Another very interesting point was made last night.  DCU has too much
    money.  That's right.  We have deposited too much money, aren't
    borrowing enough and it's hurting them.  It's hurting them because they
    can't make enough on the spread between the interest they make and the
    interest they pay and still meet expenses (overhead).  Yet, they are 
    selling all of the fixed rate mortgages they are currently writing for 
    about 9.25%.  They are basically taking the points and running.  They
    said they are doing this to keep the mixture of their loan portfolio
    where NCUA guidelines say it should be.
    
    All this additional deposits we have burdened DCU with is adversely
    affecting their ratios (some NCUA thing).  Seems the NCUA has
    GUIDELINES which say that they should have an amount equal to 6% of 
    their total assets ($370,926,000 in total assets in 1990).  So they
    SHOULD have about $22 million in equity, but only had $15.8 (1990). 
    This is where all of the "Net Income" DCU has been making over the last
    x years (since last bonus dividend) has been going.  When I asked Harry
    Goralnick if the growth of Equity would ever meet these requirements
    (since total assets is constantly increasing also), he stated it
    probably wouldn't.
    
    What this all means is that DCU will probably never see another bonus
    dividend as long as the BoD places these "guidelines" ahead of
    returning income to it's members.  It also means that anything which
    subtracts from the DCU Equity (such as LOAN LOSSES) will adversely
    affect this ratio.  The current ratio is about 4.3% (1990 Total
    Member's Equity divided by 1990 Total Assets,
    (15,868,000/370,926,000)).  This is why I have asked for the current
    NCUA rating for DCU.
    

re .7:

I fail to see the philosophical difference between a risky loan to a
member and a risky loan to a non-member.  DCU should not be making risky
loans period.  "Most members pay their loans.  Joe Deadbeat is a member.
Therefore Joe Deadbeat will pay his loan" does not make sense.

re .8:

All this banking stuff throws me for a loop.  DCU has too much money,
yet "they should have an amount equal to 6% of their total assets"
and they don't.  Please explain.

>                                                           Yet, they are 
>    selling all of the fixed rate mortgages they are currently writing for 
>    about 9.25%.  They are basically taking the points and running.

I'm not convinced that this is a bad thing.  Most of DCU's mortgages
are in New England.  It's probably better for them to diversify their
loan portfolio than to rely on New England real estate.  If interest
rates go up significantly, 30 year fixed mortgages are not a good
thing to own.  BTW, the rate today is 8.875% + 2� points.

What's a bonus dividend?

�Seems the NCUA has
�    GUIDELINES which say that they should have an amount equal to 6% of 
�    their total assets ($370,926,000 in total assets in 1990). 
    
    What is this 6% for?

    IMHO....
    
    I think that most of the writers in this notes conference may be
    "person" come-latey's......I have not seen nor can I recall as many
    members attend the annual DCU meeting.  It is always the stone thrower
    who finds the time and interest when things are not "perfect", come's
    out of the woodwork and start's to hurle the verbal/judgement
    projectiles.
    
    Where were you when the DCU was growing, growing, growing and it seemed
    that nothing could go wrong.  The BoD is "our" [choice] elected body to
    act as an oversight committee and participate [within the by-laws] in
    making both operational and policy decisions that respond to members
    needs.
    
    We members have been justly proud of the DCU performance for over 10
    years now and we placed our continued confidence in the President and
    the BoD to continue the successful track and bring home the bacon.
    
    Perhaps we have "all" been remis in not participating in the DCU..We
    have lots of vehicles we can utilize to have our voices heard and our
    opinions noted.  Have we done this on a consistant basis ? I think not!
    
    Now is the time to rally around our elected "BoD" and help them throgh
    the tough times, we must also do what we can to have our concerns
    addressed, to the extent that they will serve to shore up any weakness
    or to address a "need" that has not been attended to.  Don't forget...
    the BoD is made up of "our" co-workers.
    
    BTW
    
    I will admit that I am truly disapointed in the nature of our oversight
    responsibilities as it relates to the participation loans, however,
    it's done and what we need to hear from the BoD, is that learnings have been
    acquired and that they are smarter as a result.
    
    IMHO
    
    Every person on the BoD is bright, responsible and are providing us
    with a service that they are not compensated for.  They take time out
    of their personal lives to do this and we should recognize this. Don't
    ever think because a person sits on the BoD that they walked in smart
    about a federally chartered CU, they require time to learn and then
    apply.  Be careful not to chase future prospective BoD'rs away.
    
    Let's get behind the DCU [our CU] and support change that will make it
    more sensitive to members needs and less of a vulnerable organization.

>>re .7:
    
>>I fail to see the philosophical difference between a risky loan to a
>>member and a risky loan to a non-member.  DCU should not be making risky
>>loans period.  "Most members pay their loans.  Joe Deadbeat is a member.
>>Therefore Joe Deadbeat will pay his loan" does not make sense.

    A participation loan for real esate speculation is extremely risky by 
    definition.  A loan to a member is not even in the same universe of
    risk.  Granted, someone who has a history of defaults or who is totally
    out of the ballpark financially, should be heavily scrutinized.  But
    even they do deserve a chance at some point in time.  Maybe with a
    small loan to re-establish their credit-worthyness.
    
>re .8:
>
>All this banking stuff throws me for a loop.  DCU has too much money,
>yet "they should have an amount equal to 6% of their total assets"
>and they don't.  Please explain.

    Hmm, I thought I did.  What specifically are you looking for?  Total
    Equity/Total Assets >= 6% is the ratio NCUA looks at for evaluation
    purposes I've been told.  By "too much money" I mean too much money in
    deposits that they have not lent out.
>                                                           Yet, they are 
>    selling all of the fixed rate mortgages they are currently writing for 
>    about 9.25%.  They are basically taking the points and running.

>>I'm not convinced that this is a bad thing.  Most of DCU's mortgages
>>are in New England.  It's probably better for them to diversify their
>>loan portfolio than to rely on New England real estate.  If interest
>>rates go up significantly, 30 year fixed mortgages are not a good
>>thing to own.  BTW, the rate today is 8.875% + 2� points.

    Depends where you think interest rates are going.  They have been going
    down lately, not up.  So keeping a 9.25% mortgage would seem to be OK
    for the time.  But they already have, I think, $60 million of them and
    think that is enough.  They are holding all variable rate mortgages. 
    Which are getting considerably less in interest.  My impression is that
    with fixed rates so low that there isn't anywhere near the demand for
    variable rate mortgages that there is for fixed term.
    
>What's a bonus dividend?

    As a member of DCU you will never know.  ;-)  It is a distribution of
    credit union equity.  For the first 3-4 years (?) DCU gave people
    another percentage point (example) of interest on their savings or 
    reduced their rate by x% for that year.  Not sure of the exact
    mechanics since I've never experienced one myself.
    
RE: .??
    
    �Seems the NCUA has
�    GUIDELINES which say that they should have an amount equal to 6% of 
�    their total assets ($370,926,000 in total assets in 1990). 
    
>>    What is this 6% for?
    
    I've been told it used as a measurement to guage a credit union.  I'm
    trying to find out more about it from the NCUA.  I'll let you know what
    I find.  It is basically a reserve of capital to help protect the
    institution should it encounter any bumps along the way, such as large loan
    losses.
    

    Re .6:                                                       
    
>   You seem to be arguing that "taking a chance" on members is good, but
>   taking a chance on participation loans is bad.  It's obvious (now,
>   anyway) that the "chance" taken on Mangone was a very bad idea, but
>   I'll argue that in order to provide loans at a low interest rate and
>   savings at a high interest rate, DCU should only provide loans that are
>   rock solid.  If a member has to get a loan from the Neil Bush Savings &
>   Loan, so be it.
    
    Indeed, I *am* arguing that DCU's lending criteria should be somewhat
    more flexible than those of commercial banks.  That doesn't mean "give
    away the store", but it *does* mean that the credit union should serve
    the useful purposes of helping young employees to establish credit
    histories, for example.  Even if DCU's rates were slightly worse than
    those of commercial banks, a lending policy that gives members the
    benefit of the doubt and operates in a hassle-free environment of
    mutual trust should bring members back into the fold.
    
    This isn't necessarily a "risky" policy.  Consider that the DCU has a
    much closer relationship with our common employer (Digital) than
    outside lenders do.  Consider further the fact that the number of bad
    loans written by credit unions (DCU included) is routinely FAR LOWER
    than the average for banks.  By providing a hassle-free and flexible
    loan policy, the slight costs associated with increased risk are FAR
    lower than the revenues derived from improved loan business.  Excluding
    a certain $18M in non-performing participation loans, DCU's portfolio
    is ROCK SOLID, even as the "Massachusetts Miracle" has faded.
    
    The Mangone affair will haunt DCU for years to come, but it CANNOT be
    allowed to paralyze its operations.  The BoD doesn't think in terms of
    a "single point of failure", so it wasn't adequately protected from the
    outrageous fraud that was perpetrated upon them.  Whether or not the
    BoD actually learned any lessons through all this, the NCUA has set new
    investment standards that are in line with the "conservative" policy
    called for in the bylaws.  In the meantime, DCU's long-term survival
    requires it to do a better job of servicing a shrinking population.

    I am glad DCU are not holding on to a lot of long term low interest
    mortages (that's of course if you believe like I do that interest rates
    are low now). If interest rates go up and they're stuck with a lot of
    low interest rate mortages that they can't call in they'd be up shit
    creek. Holding on to a lot of long term mortages is not a safe thing to
    do.

    The capital asset ratio discussed last night is the key to all this.
    They didn't say this directly but they have too many assets and not
    enough equity. That in the NCUA mind makes them look risky, the NCUA
    doesn't like that. Until DCU can get its loan portfolio generating some
    healthy income they need to shoo away some of the deposits to reduce
    their cash and hence assets and liabilities.

    I thought about this after the meeting. Increasing fees really helps in
    the above regard:

    	a) It increases real fee income
    	b) It causes people to withdraw their deposits

    Both of the above help them move towards the NCUA guidelines.
    If that $x million provision for loan loss they took last year ever turns
    into a real loss it'll further knock down the equity and move them even
    further away from the NCUA guidelines. Bad news.

    Of course what DCU should be doing is:

    	a) Working out how they can do a better job at marketing their loan
    	   services (maybe they need a "More Choices" PR campaign!)

    	b) Cutting expenses.

    	c) Doing eberything they can to offer competitive loan rates and
    	   competitive savings rates.

    There were a a LOT of good suggestions made to the board last night. After 
    they got past telling us how they've been doing such a superb job and
    being incredulous about how anybody thought they could do better I did
    notice a lot of listening and a lot of note taking. My perception was
    that the board found the meeting valuable.

    It was also my perception that the board has a lot of internal
    disagreement on policy. I can't put my finger on it but I got the
    strong feeling that a conscious decision was made beforehand to let
    Mark (as the chairman) speak for the board and not bring up any of
    the discussions and quite probably disagreements the board had amongst
    themselves. Present a united front etc. I may be wrong but that was my
    perception. I definitely found some members of the board to be far more
    credible than others.

    What made me most comfortable was listening to the DCU Director of
    Finance (I think that was his title, he was sitting next to the
    lawyer). He seemed anxious to give straight answers, something that
    Mark seemed uncomfortable with especially to start with.

    What DCU needs to do now is to clearly tell its membership how it
    intends to move into the future and why they believe it is an
    institution its members wish to stay with. I didn't hear a lot of that
    last night.

    Dave

    
    RE: .11
    
    Had the BoD reported in the DCU annual reports that they had loaned
    $18,000,000 for real estate speculation between 1985 & 1990, there
    WOULD have been an instant interest, on my part anyways.  I can 
    guarantee that.
    
    But their reports excluded VITAL information for these years and
    concealed these loans.  Even some senior management officials of DCU
    were not aware of them!  And they would still not be public had the
    NCUA not come in and grabbed Mangone in their investigation of Barnstable
    CU.  NONE of this information disclosure has been voluntary by DCU and
    its BoD.  They had over $2.5 million in losses in 1990 on these
    participation loans.  Yet where was that significant piece of
    information on the Annual Report?  I was at first denied access to the 
    full annual reports which contain this information.  And all this was 
    going on while they professed to be conservative lenders.  
    
    People in positions of authority and responsibility MUST be held
    accountable for their actions.  Simply saying "We screwed up." isn't
    enough.  But they haven't even said THAT much.  There has been too much
    denial, concealment and behind closed doors deals (Mangone) with this 
    BoD to continue to place ANY of my trust in them.  Everybody out there
    has to decide for themselves based on the facts and what has happened.
    
    You're entitled to your opinion.  But I've learned far too much over
    the last few weeks to share any of it.  I didn't start out with this
    opinion either.  It is based on facts and not emotion.
    

    I guess I'm still confused over the equity/assets thing.  Assets are
    what DCU has on deposit, correct?  Equity is the amount of money they
    have out in loans?
    
    When I think of equity I think of the amount (down payment + principal)
    I have paid on my home.  Maybe that's why I'm confused.

    
    RE: .16
    
    I realize this is a bit confusing.  I knew my B.S in Accounting would
    come in handy some day.
    
    From the Annual Report Balance Sheet:
    Assets:  (basically money DCU has, money owed to it, property, etc.)
    		Cash
    		Federal funds sold
    		U.S Government Obligation
    		Loans
    		Other Real Estate Owned
    		Accrued interest receivable
    		Property and Equipment, net   (net is less depreciation)
    		etc.
    
    	Liabilities (basically money the DCU owes somebody)
    		Savings Accounts
    		Accounts payable and accrued expenses
    
    	Equity
    		Retained earnings (yearly profits add to this)
    		Donated Equity    (Digital donated this when DCU first opened)
    
    
    The accounting formula is the Assets = Liabilities + Equity.  
    

    Re: .16 & .17:  Yes, it occurred to me on the way home last night that
    this must all balance out to 0.  Our deposits (in our savings accounts
    and checking accounts and IRAs etc.) are *our* assets (credits).  Thus,
    strange as it may seem, they *must* be a liability (debit) to the DCU
    (or any other financial institution).  Perhaps someone with a banking
    or financial background (not pretend bankers, I have someone in mind)
    can be persuaded to give us a brief High Finance and Banking 101
    tutorial.

    On the meeting:
    
    I got the feeling that a few of the board members (from a post-meeting
    discussion in the parking lot) are at least sympathetic with our side
    and are willing to listen to our suggestions.
    
    I can't add much to the recaps of last night's sessions over those
    already given to us by the others who were there.
    
    I will add that they did leave with what appeared to be an action item
    list a mile long.  There were some indications that we might see some
    action on some of these before the next meeting in September.
    
    Until last night, I don't think that most of the board had actually
    heard from members in any meaningful way.  They probably saw more
    people and heard more comments last night than some of the board
    members (who have been on the board for 10+ years) have heard in  their
    entire tenures.  So, if it looks like some positive actions and
    responses to last night's action list has occurred (or is occurring)
    then I will believe that things are going to change.
    
    Meanwhile, I reserve judgement until the next meeting.

    Did anyone take down a list of specific questions and answers at the
    meeting?

    Where were these member surveys that keep getting mentioned?  I've been
    a member for 7 years and I've never seen one.

    
    RE: .20
    
    The meeting lasted over 3 hours.  Many answers lead to other questions. 
    It would be impossible to re-create the entire meeting here.  Each
    person present came away with their own impression.  I hope you can
    make the Sept. meeting to form your own.
    
    RE: .21
    
    Ditto.  I know of nobody who has ever received one of these.
    

re: surveys

I received one sometime in the past few years.  Since I've never been within
1000 miles of a DCU branch, it was rather meaningless to me.  I did tell them
that they needed to streamline their loan application/approval process for
those of use out here in the field.

Bob

    
    will some kind attendee attempt to enter the minutes? A couple notes
    alluded to minutes but dengereated into speeches.
    
    thanx! simon

    >I think that most of the writers in this notes conference may be
    >"person" come-latey's......I have not seen nor can I recall as many
    >members attend the annual DCU meeting.  It is always the stone thrower
    >who finds the time and interest when things are not "perfect", come's
    >out of the woodwork and start's to hurle the verbal/judgement
    >projectiles.
    
    I wish I were a come lately, but I have not been.  I wish I would have
    gone to an annual meeting, but have not.  I have spent a lot of time
    calling prodding, pushing and trying to get DCU to waker up.  As they
    grew bigger they became less responsive and willing to change to help
    the member/owners.
    
    >Where were you when the DCU was growing, growing, growing and it seemed
    >that nothing could go wrong.  The BoD is "our" [choice] elected body to
    >act as an oversight committee and participate [within the by-laws] in
    >making both operational and policy decisions that respond to members
    >needs.
    
    I have never voted for an incumbant, I can proudly say.  I have seen
    their smoke and mirrors.
    
    >We members have been justly proud of the DCU performance for over 10
    >years now and we placed our continued confidence in the President and
    >the BoD to continue the successful track and bring home the bacon.
    
    I am glad you were, I was not.  DCU has become too big and lost the
    reason why it is in exsitance - DEC employees!
    
    >Perhaps we have "all" been remis in not participating in the DCU..We
    >have lots of vehicles we can utilize to have our voices heard and our
    >opinions noted.  Have we done this on a consistant basis ? I think not!
    
    Maybe so, but everyone has a right to PROTECT their money thatis in
    DCU.  If DCU is not doing the job, then it should be fixed or shut
    down.  It is in need of a good spring cleaning.
    
    As I read your note, I got a feeling you were talking how you looked at
    what youhave done and feel that everyone else is the same.  This is nto
    true.
    
    >Now is the time to rally around our elected "BoD" and help them throgh
    >the tough times, we must also do what we can to have our concerns
    >addressed, to the extent that they will serve to shore up any weakness
    >or to address a "need" that has not been attended to.  Don't forget...
    >the BoD is made up of "our" co-workers.
    
    I will rally around them, once a new slate of members is elected.  They
    have not listened in the past.  If they pretend to start listening now,
    they will forget about us again, in about 3 months...
    
    >I will admit that I am truly disapointed in the nature of our oversight
    >responsibilities as it relates to the participation loans, however,
    >it's done and what we need to hear from the BoD, is that learnings have been
    >acquired and that they are smarter as a result.
    
    Hey its only money...  
    
    >Every person on the BoD is bright, responsible and are providing us
    >with a service that they are not compensated for.  They take time out
    
    I keep hearing this and wonder why they do it.  Why would someone put
    themselves in a position?  Nothing is free...
    
    >of their personal lives to do this and we should recognize this. Don't
    >ever think because a person sits on the BoD that they walked in smart
    >about a federally chartered CU, they require time to learn and then
    >apply.  Be careful not to chase future prospective BoD'rs away.
    
    
    
    >Let's get behind the DCU [our CU] and support change that will make it
    >more sensitive to members needs and less of a vulnerable organization.

    I am behind DCU and its hardworking employees, but behind the bozos at
    the top including the BOD.  The employees I see day after day, have my
    FULL sympothy.  They have no control over the people above them.
    
    Lets fix the problems and clean house...

						22-AUG-1991

	Mark Steinkrauss
	Chairman, Board of Directors
	Digital Credit Union

	Dear Mr Steinkrauss,

	Thank you  very  much  for  holding  the  special meeting last
	night.   I  feel better, but I feel that you are still missing
	the point of our anger.

	First let  me clarify my assertion of last night that you (the
	collective "you" as in the board) are dishonest.  I don't mean
	dishonest   in  the  sense  that  Mangone  was  dishonest  and
	fraudulent.   I  mean  in  the  sense  that  you still will do
	anything  to  avoid  being  straight  and  forthright  in your
	statements to us.

	1) Concerning  the  cape  properties;  a  couple  of  us spent
	several minutes of the meeting trying to get you to admit that
	trusting  Mangone on the loan for cape property was a mistake.
	We  couldn't  have  been any more obvious.  You were blatantly
	evasive.   In  this  particular  case all we wanted you to say
	was,  "We  made a mistake".  What's so hard about that? We are
	not  in  a  court  of  law.  We're not going to sue you if you
	admit responsibility.

	I can  think of two possibilities.  Either you don't think you
	made  a  mistake  which scares me (see below), or you do think
	you  made  a  mistake,  in which case you are not being honest
	with us.

	If you  don't think you make a mistake, you are asserting that
	given  the  same  circumstances,  you  will do the same thing,
	i.e.,  your  behavior  will not change.  This is *not* what we
	want to hear.

	I teach  flying.   One  of  the things we have to know to be a
	certified  flight instructor is what the term "learning" means
	because that is the goal of the teaching process.  Learning is
	defined  by  the FAA as a "change in behavior".  If there's no
	change  in behavior, then there has been no learning.  In this
	case,  if  your  behavior does not change relative to granting
	loans,  then  you  are not exhibiting learning.  This is *not*
	what we need to hear.

	Yes, we hear that you are planning to put into place different
	checks  and  balances,  and the NCUA guidelines prohibit, etc.
	That's  all good.  What we want to hear is an apology and that
	you  (the  board)  made  a  mistake.  Give us straight reasons
	(which  you  appeared  to do) but also tell us what you should
	have  done  and  will do in the future.  We're not hearing you
	say this second part.

	All this  obfuscation  provokes  me to anger.  I still get the
	feeling that you are unwilling to be straight with us.  I told
	you last night that you have violated our trust, and must earn
	it  back  again. You are not making much progress here.

	Somebody else  suggested  a  "humble" approach.  I agree.  You
	said  you  plan  to  send  out  a  letter  with  the September
	statement.   That's  great.  And this letter should start with
	an apology containing the words "we made a mistake".  If I see
	and  hear those words, I'll feel that you have finally decided
	to  treat  your  depositers like intelligent human beings, and
	are  willing  to  begin  a  new  policy  of  being  honest and
	straightforward.   I'll  certainly  be  more willing to accept
	mistakes  and  possibly  leave  my money in DCU at an inferior
	rate  and be charged for the privilege, if I know you'll be up
	front with me.

	2) The  second  thing  I  want  to  hear/see is an apology and
	retraction  of  the  assertion  that  the  increased fees have
	"absolutely  no connection whatsoever" with the Mangone fraud.
	We  need  to  get  the  DCU  back to financial health.  We can
	understand  that.  You made a mistake in trusting Mangone (see
	#1).   Tell  us about all the reasons for increasing the fees,
	and say that one of the reasons is to help finance the Mangone
	fraud.   If  I  see  this  in your printed statment, I'll feel
	better  that  you  are  being  straight with us.

	3) Don't  use a PR firm for *anything* anymore.  When you have
	to  make  a statement about, say, increasing fees, I expect to
	see a letter from the CEO, and/or the board, stating the facts
	and  what you are going to do.  Save all that money that would
	otherwise go to some PR firm.

	PR firms  in  my opinion are paid to communicate in a way that
	"obscures"  the  real  message,  in  other words, dishonestly.
	What  we  need  for  the  forseeable future is only direct and
	honest  communication.   I  felt  we  just  barely  started to
	scratch  the surface last night.  You need to do more of that.
	Never again insult us with drivel from a PR firm.

	In summary,  I can understand people making mistakes.  I'll be
	far  more  tolerant  of  mistakes  if  I  feel  that I'm being
	honestly  respected.   Last  night  was  merely  a  beginning.
	Whether  the  honest  statements  continue is completely up to
	you.

						Sincerely,


						Paul Kinzelman
						Badge 29800

    re .20, .24 Weimin Tchen (VAXWRK::) and I both took careful notes --
    I've got 12 pages of them.  I plan to type in a summary and let Weimin
    look at it, then post it here -- probably not tonight, but probably no
    later than Monday either.

    
    RE: .20 & .24
    
    The meeting lasted 3.25 hours.  There were no video cameras or tape
    recorders present that I am aware of.  Personally, I couldn't have
    begun to write done most of what was said.  Sounds like some diligently
    tried though.  Unfortunately what you will be missing is the vocal
    tone, facial expressions, body language, etc.  I, personally, got a
    feel for one of the least vocal directors through his expressions. 
    Many if not all of the points brought up by the members meet with a
    noticeable nod, while other directors sat motionless.
    
    I strongly urge people to make time to attend these if possible.  Also,
    come prepared.  Have your questions ready and know who you will ask
    them of.  A big problem I saw with this meeting was the excessive
    speaking of Mark Steinkrauss.  He fielded almost all questions and then
    passed them off to others if he wanted to.  Occassionally, another
    director or management person would contribute.  But it was not that
    much IMO.  I intend to ask questions directed at each and every
    director next meeting.  I don't want anymore speaches from a spokeperson.
    I want to hear directly from each director on the issues.  Without this 
    they all get lumped together, justly or unjustly.
    

       They also mentioned moving the BoD meetings to differnet sights from
    time to time. Not to allow us to attend them, I don't beleive, but to
    be available to talk with members beforehand.
       They seemed to agree that 'the brochure' was a bad idea. But guess
    what, the 'More choices' signs are still up! At least at the MRO1
    branch. So much for that.
                                    Denny

Several notes refer to the question of whether the DCU should make risky 
loans to members.  The word "risk" is being used in at least two different 
senses here and I think some people may be getting them mixed up.  Here
are some definitions.


1)  Risk:  the chance that something will happen.  A loan to someone who
might lose his/her job is risky in this sense, because they might be
unable to pay.  A loan to a trust company to buy real estate that might
appreciate or might become a money pit is also risky in this way.

2)  Risk:  the EXPECTED chance that something will happen.  This is the
result of some computation or process of evaluating risk.  This only has
a relationship to 1) if the criteria used match reality.


Let's look at the difference as it relates to participation loans and
member loans by the DCU:

Participation loans, between 10 and 3 years ago, had very low risk(2) in
the eyes of most banks.  When I sold my house 3 years ago, I figured out
that the risk(1) was actually quite high, especially for condos and vacation
property.  Most banks seemed to wake up to this difference at the same
time.  The DCU BoD seems to have missed the last three years of falling real
estate values, and instead continued to judge risk(2) based on completely
filled out paperwork, the unverified word of the president, and the fact
that the folks getting the money were trusts rather than private people.
I hope I'm exaggerating, but nobody has reported the BoD as saying anything
that suggests that they acted otherwise.  Quite the contrary.

Member loans, on the other hand, seem to mostly be judged for risk(2) based
on a set of criteria that include loan ratios, proof of income, and a lot
of other such stuff.  Historical experience (proven again in the auditor's
report that the BoD hid from the members) shows that member loans have an
extremely low risk(1).  This demonstrates to this simple engineer that the
DCU's evaluation of risk(2) has little relationship to risk(1) for member
loans.  It also suggests that the DCU could make a lot of "risky(2)" member
loans without increasing their risk(1) at all -- certainly not to anything
near the risk(1) level for real estate participation loans.

To cite a concrete example of the distinction I am describing, there is
a car dealership in southern CA (near where I used to live) that makes
a specialty of selling cars to new immigrants who can't speak English.
They also make car loans to their customers, most of whom cannot get a
loan through a regular bank.  Why?  Most of them haven't got a credit
history.  Many of them don't (yet) have very steady employment.  But
the man who ran the car dealership knew that a well educated refugee
in Los Angeles, who used to be middle class back home, is likely to turn 
out to be a good credit risk.  So he screened loans on an entirely 
different set of criteria than the banks used.  His actual default rate was
the same as the banks got, even though he almost exclusively dealt with
those the banks wouldn't touch.  Clearly, his idea of risk(2) was far more
in agreement with reality than that of the bank.


Therefore, while it is essential that the paid officers of the DCU be
financial professionals, it seems obvious to me that the members of the
BoD should include a lot of people who are *not* financial professionals,
but who rather are smart folks who have different ways of thinking, and
can blow the whistle when the DCU strays away from rationality or forgets
who its members/owners really are and what they need.  I think this would
also help the DCU to get its risk(2) more in like with risk(1).  It would
also break up this attitude of hiding unpleasant facts from the great
unwashed.  Who ever *heard* of a company publishing an annual statement 
that didn't contain the auditor's report!

	Enjoy,
	Larry

    Bill Kindel in .5  said the the bod did a reasonable job
    of explaining why the rate increase was called for.  I think I'VE
    missed the explanation.  Could someone who went explain why the
    rate increase was justified please.  
    Did anyone request an explaination of why other means of getting money
    were not tried?
    
    ed
    
    

Not intending to be unfriendly here, but...

	Could  we please reserve the comments/contents of this particular
	note to what actually happened during the meeting?

	There is a lot of speechification in the previous notes as people
	continue to explain how things should be.  In this note, I'd like
	to hear only what was said so I can draw my own conclusions.

Thanks!
/Chris

    This is an official response by Mary Madden of the DCU. The response,
    dated 28-AUG-1991, applies to this note topic and is included below.
    See note 2.22 for more information.

    Your comments on this response should be posted here or directed to
    to DCU directly at Mary Madden's number (dtn) 223-6735 x207.

    Carl Leeber
******************************************************************************
         
         On Wednesday, August 21st, the DCU Board of Directors (BOD) 
         met with a group of DCU members in an informal discussion and 
         question & answer period.  We're grateful to those who were 
         able to attend on short notice and share their thoughts, 
         concerns, and suggestions, and we appreciate the breadth of 
         constructive ideas we received.  A wide range of topics was 
         covered at the meeting, including (among others) topics of 
         communications to members (content, timeliness, and 
         completeness); participation loans; types of services; number 
         of branches; the brochure announcing changes in checking 
         accounts; general investment philosophies and practices; 
         update on the Richard Mangone situation and its impact on 
         DCU; the DCU By-laws; financial performance; nomination and 
         election procedures for positions on the DCU BOD; and tenure 
         for such BOD positions.  A similar meeting will be held on 
         Wednesday, September 10th, at the same location (DCU 
         cafeteria, 3rd Floor, PKO5, DCU Administration Building), 
         5:30 - 7:30 p.m.
         
         The BOD plans to discuss and consider the general meeting 
         content and suggestions that were made at the meeting and 
         from future meetings with members.  A report on these 
         meetings and any subsequent actions will be included in the 
         September mailing to all DCU members.  It is expected that 
         similar reports will be included in other quarterly mailings 
         to all DCU members. 
         
         			  Sincerely yours,
         
         			  DCU Board of Directors
         
         			  Mark Steinkrauss, Chairman
         			  Jeffry Gibson
         			  Dan Infante
         			  Charlene O'Brien
         			  Jack Rugheimer
         			  Susan Shapiro
         			  Abbott Weiss
******************************************************************************

    
>         Wednesday, September 10th, at the same location (DCU 
>         cafeteria, 3rd Floor, PKO5, DCU Administration Building), 
>         5:30 - 7:30 p.m.
    
    Sooo, is it Tuesday, September 10th or Wednesday, September 11th???
    
    

    RE: <<< Note 268.34 >>>

    This is an official response by Mary Madden of the DCU. The response,
    dated 29-AUG-1991, applies to this note topic and is included below.
    See note 2.22 for more information.

    Your comments on this response should be posted here or directed to
    to DCU directly at Mary Madden's number (dtn) 223-6735 x207.

    Carl Leeber
******************************************************************************

         CORRECTION TO NOTE 268.34

         The informal discussion with DCU's Board of Directors is
         scheduled for Tuesday, September 10, 1991 in the DCU
         cafeteria, 3rd floor, PKO5, DCU Administration Building,
         5:30 - 7:30 p.m.
         
******************************************************************************

I've called Mary Madden to ask her to find out if a videocamera
would be allowed at the second meeting.  Assuming someone could
tape the meeting, are there a bunch of people who definately
want a tape?  And would be willing to mail either a blank videotape
or about $5 to the person with the camera?  Or do people feel they've
found out about as much as they want from the first meeting (either
because they are satisfied or because they are convinced that the
board won't say anything interesting at the second meeting)?

	Enjoy,
	Larry

    
    Video taping may be tough.  The lunchroom where the meeting is
    scheduled to be held is L shaped.  You may need several audio inputs to
    catch the questions and answers too.  But I'm sure there are some video
    pro's out there who may be up to the challenge.
    
    I'll be REAL surprised if taping is allowed during this "informal"
    meeting.
    

    Here are my minutes of the DCU meeting. Unfortunately it looks like Bob
    Leigh hasn't had time to input his 12 pages of notes so I've used my
    2.5 pages of brief notes. I just recorded the overall subject of queries
    & answers - except for the sentences in quotes. As mentioned the tone
    of the meetng is missing from these dry notes. I left the meeting at 8
    due to family obligations but the meeting continues for about 90
    minutes.
    
    
Board members present:

Mark Steinkraus	(MS)	8 years on board
Abbott Weiss		3
Susan Shapiro	(SS)	9
Jack Rugheimer		3
Charlene O'Brien	11
Jeffry Gibson		2

MS: Reasons for fee increase:
	1. loan demand down
	2. w/in last year wrote off more bad loans
	3. survey of members showed members want better service i.e. branches
		(there are 32 branches)

SS: Deposits grew 6% recently. Loan demand was growing 25% over the last 6
	years; now it dropped 5%. DCU invests in member loans & short term
	investments.

Q:  Cape Code real estate isn't a short-term investment.
MS: Mangone loans were viewed a good investment since they had a high yield &
	were secured by real estate (land) whose value was rising in the "Mass
	miracle". It was limited to ~12 loans which were OK for 5 years;
	several were begun & closed. They were reviewed by accountants &
	NCUA (Nat. Credit Union Assoc.) examiner w/ no comment. The loans were
	originated & handled by the Barnstable CU; DCU just handled papers -
	much of which were fraudulent due to fraudulent attorneys & appraisers.
	"Now our duty is to recoup as much of this potential loss as possible"

Q:  How did equity the borrowers have in these loans?
MS: It looked like 20 or 30%.

Q:  The checking account brochure is a masterpiece of double-talk. Don't charge
	former employees because they don't have direct deposit.


Q:  Why did DCU sell my recent loan to another bank if it is low on loan
	investments?
A:  Banks need a portfolio mix so that not all their loans come due
	simultaneously.

Q:  Request the board to acknowledge that they made a mistake w/ the Mangone
	loans.
MS: "We were deceived." "Based on the information we have, we didn't make a
	mistake."
A:  NCUA requires that no more loans of this type be made.


MS: "We apologize for the brochure if it is seen as an insult; that was not
	our intent." 
    Actions on Mangone loans:
	1. Of the 12 loans totaling $12 mil, DCU has filed for the $6 mil bond.
		"We stand a very good chance of getting most if not all of
		that".
	2. DCU is trying to determine the real value of the assets & to sell
		them - probably ~ $4 mil.
	3. DCU is suing Mangone - but his assets are hard to find and there are
		other suits pending against him.

Q:  Is there any restriction on making risky investments e.g. biotech?
SS: DCU will only invest in top-rated bonds & gov securities.

Q:  On the issue of communication to members:
	1. e.g. no accountability after the brochure problem
	2. New members will withdraw RSVP funds etc. since the only no-charge
		tie-in is w/ CD's.
	3. elections are restricted.
	4. Why doesn't DCU reply in the notesfile.
Member: When I ran I didn't feel restrictions.

MS: I choose not to reply in notes since it might communicate w/ only a small
	percent of the 84,000 members. Also my answer my be seen as official.
SS: I've gotten personal insults and don't want more.
DCU.note moderator: Send me copies of the insults.
SS: Will do so.

Q:  I don't think you're dishonest, I view you as incompetent.
MS: Mangone was the loan officer.

Q:  Why did DCU added $4 mil provision of loan losses in Jan but the Mangone
	problem was disclosed in April? 
A:  NCUA wanted DCU to have a more conservative position & new appraisals.

Q:  Is there a relation between the fee & the $18 mil?
MS: $18 mil does impact, but the fee is primarily due to business reasons.
	DCU's equity/asset ratio = 3%, it peers av = 6%. DCU needs to move to
	7%. Five years ago regulatory rules changed & DCU needs to show progress
	in this area.
	

MS: The board is thinking of holding board meetings at various locations in
	the greater Maynard area and opening the first hour to questions. (The
	board meets once a month at 5PM).
    The board made an offer to a new CEO who will begin in early Sept.


Q:  Member survey may not be accurate (like asking at DECUS if customers want
	new features but not discussing alternatives). We need good rates, not
	services. Member top priorities are probably:
		1. good return on deposits
		2. low interest loans
		3. free checking
A:  DCU surveyed around the US.


Q:  Why didn't DCU shave the interest rate to raise money rather than using
	fees?
A:  Interest couldn't be reduced anymore since wouldn't be competitive.
    Due to the DCU software, a checking account is needed for loans etc.
	resulting in 10,000 accounts w/ $0 balance for which statements are
	mailed. Average cost of a checking account is $4/month.

Q:  Is there a policy to prevent fraud by just a single people.
A:  Dual signatures are needed for transfers of money. There are named people
	w/ monetary caps. Senior manager are now more visible to the board.

Q:  Request disclosure of loans & financial connections of board.
MS: No. Board members need to go through the same loan process as other members.
	NCUA checks board member loans.

Q:  Request disclosure by DCU officers.
A:  No.

re: 268.40 

> Q:  Why didn't DCU shave the interest rate to raise money rather than using
> 	fees?
> A:  Interest couldn't be reduced anymore since wouldn't be competitive.
>     Due to the DCU software, a checking account is needed for loans etc.
>	resulting in 10,000 accounts w/ $0 balance for which statements are
>	mailed. Average cost of a checking account is $4/month.


So we're going to get charged for checking because of DCU's faulty software?

Great response from a computer company's credit union.

Laura

    re .-1
    
    	Reminds me of my days in field service about 10 years ago, when I
    went and did a PM on a dual system - hot standby data concentrator,
    config of 11/35's with DJ11's, RK03's etc, that was used in the bank
    that I banked with. On my way out,I stopped to cash a check, and when
    the teller told me insufficient funds, I asked for a re-check, and lo
    and behold, I did have (lots of) money in their bank. The teller tried
    to tell me it must have been a computer error. She couldn't have picked
    a worse person to try that excuse on. I gave her somewhat of a piece of
    my mind about it all....
    
    Come on DCU, If poorly designed and coded software is at fault here, I
    am sure that you can find many people willing to help fix it. While we
    are about it, how about re-coding the dectalk interface so that it can
    do check rollbacks, and so on...
    
    q
    

Re .40

>Q:  Why didn't DCU shave the interest rate to raise money rather than using
>	fees?
>A:  Interest couldn't be reduced anymore since wouldn't be competitive.
>    Due to the DCU software, a checking account is needed for loans etc.
>	resulting in 10,000 accounts w/ $0 balance for which statements are
>	mailed. Average cost of a checking account is $4/month.


    This might be a minor point, but recently I called the home office
    when the 'new' checking fees were offered.  I don't have any need
    for the checking account that was required to be opened at the time
    I got a home-equity loan.  I was informed that 'new' procedures no
    longer required me to have the checking account (which was only for
    clearing H.E.L. drafts against).  I never used the checking account
    (never even got checks for it), it was required by DCU.  Needless to
    say, I've already gone to my local branch and closed the account.

    However, and this is the part that really burns me..  If I hadn't 
    looked into this, then on those rare occasions that I use a draft
    check, it would have cleared thru my checking account, and I would
    get stuck with a service charge.  

    C'mon DCU, your members are COMPUTER people, lame excuses about
    software are the LAST thing you should try on us...  

    Csw

I was unable to reach Mary Madden to check on videotaping the next meeting
-- she and I played phone tag for a while but I never caught her.  It looks
like a moot point, however, since nobody has expressed an interest in 
having a tape of the meeting.

	Larry Seiler

    Weimin has covered in more concise form about 10 out of my 12 pages of
    scribbles.  Here's the rest of what I've got:
    
Q:  Are there restrictions now on the president's participation in other
credit unions' boards?

SS: None now.  Good idea.

Q: The responses in the notesfile seem neutered.

Mary M: Since names are not attached, we don't know who's asking.
We try to be matter-of-fact.

Q: I suggest that in future you mail out annual reports.

SS: It was a member suggestion to save money by not doing so.

A Weiss:  The new CEO stated that in his first months in office he wants
to go out and talk to people.

Q: How many people have gotten on the ballot without the blessing of the
nominating committee, by petition?

A: At least 2.

Q: Either the process of doing so is broken, or the intent is to keep others
off the ballot.  It might be enlightening for current board members to try
getting petition signatures in 2 or 3 weeks' time.

A: Most folks who've done petitions have done so after not being approved 
by the nominating committee.

Q: The notesfile might be useful for sharing information on this issue.
For example, over 5 years, who has tried for approval by the nominating
committee, who succeeded, and who was rejected.

Q: The results of your survey of the competition could also be shared in the
notesfile.  People in notes feel DCU is not competitive in rates for savings
or loans, or ease of getting loans.

Q: Brochure refers to "weekly" direct deposit -- does biweekly qualify?

A: Yes.  Any ACH direct deposit will do.

Q: Waivers of inactive account charges of $2.50 for under 18 or over 65
were not in the fee schedule that was mailed out.

Q: This is starting to feel like the reason I left Baybank.  You are getting
very like them, except your tellers smile.

Q: Could there be multiple, smaller DCU's by geography, if there are no
economies of scale?

Q: Get back to basics!  We realize times have changed, we could accept some
fees.  Look at ways to increase loan volumes.  Look at decreasing the number
of branches, increasing the number of ATM's or variety of transactions
available through them.  Trade free ATM use for closing existing branches.

Mark S: Good points.

A: Recently, it's become possible to use other banks' ATM cards in DCU ATM's.

Q: Concerning board nominations, maybe, don't put "incumbent" on the ballots
to make folkd read candidates' qualifications.  Do you have an opinion on
limiting the number of terms of BOD members?

A: It's to be considered.  We'll bring it up at the September board meeting.

Q: Consider submitting questions to members, like DEC's proxies do.  For
instance, changes to the bylaws.

Mark S: That would be less flexible in emergencies.

    
    
    thanx for the minutes.
    
    simon

>>Q: I suggest that in future you mail out annual reports.
>>
>>SS: It was a member suggestion to save money by not doing so.

    Should have figured this was our fault too!  Do you think we saved $18
    million??  Some things should NOT be exposed to cost cutting.  Complete
    and accurate financial reports are one of these things.  Let's cut
    bill payments by phone, Autonet and blender insurance before cutting
    this please.
    
>>Q: Consider submitting questions to members, like DEC's proxies do.  For
>>instance, changes to the bylaws.
>>
>>Mark S: That would be less flexible in emergencies.
    
    I suggested this.  Emergency changes would be allowed BUT they would
    have to be approved by the membership at the next general election. 
    Changes to the Bylaws that are NOT emergencies would require membership
    approval, such as changes to elections, membership representation on
    the credit committee, etc. etc.
    

   Actually I  tend  to  believe  that  most  people won't even look at the
   annual  report  so I don't think it's so bad an idea to not mail them to
   members, provided that the *full* annual report be mailed to anybody who
   asks for it.

    I agree with .48.  It would be a waste of money and paper to mail these
    to every member.  But, make them available to anyone who wants one!
    Each DCU branch could have some on hand, and if someone is not near
    a branch then have it mailed to them.

    re: .49:  Which, I believe, is exactly how the full DEC annual report
    is handled...

re: .50

	Except  that  the  reports  that  are  available  on  demand  are
	incomplete, lack the notes accompanying the statements (where the
	real stuff is), and aren't much use.

/c