Conference 7.286::dcu

273.0. "Sharedraft Charges and Attitudes at DCU" by CSSE::OVERHULSER () Wed Aug 28 1991 11:12

Any of you who have been members of DCU since the beginning - around 1980 -
will know what I mean when I say DCU has changed and not necessarily for
the better. Most of the changes are subtle, like when you call with a 
complaint you once got action and now get retoric. Like when you don't
like the latest set of changes which no one asked you about before they
were implemented. Those who don't want to hear the message will think this
note is a complaint about the new charges for checking. They will not 
understand the real issues because they will be more concerned with
discrediting the sender than with looking at the real problem which is one
of attitude. Does any of this sound familiar? 
Today I received the attached commentary on the new charges for checking
accounts at DCU. I agree with the comments except for the part about the
DCU president running off with 70 million dollars being the cause. That's
probably insured so probably not the real reason for the change.  The real 
reason is more likely declining revenues resulting from decreased new loan 
activity and increased losses for uncollectable debts. I made 
the discovery about the new checking account charges at the DCU branch 
last month when I picked up a copy of the glossy pamphlet describing the 
two great ways to have a checking accout at DCU. I called DCU at that time 
and was told 'they had not received many calls about this issue'. 
I'm accustomed to getting that response from DCU whenever I've called with
a complaint about anything having to do with changes which they are
implementing (the last time I called it was about the closing of most
branches from 12:45 - 1:45 each day). They told me that there would be an
enclosure with my next statement explaining the new charges. I expected a 
letter which would CLEARLY explain that there would now be a charge for 
checking. Instead I received what the rest of you received - the same 
pamphlet which brags of all the advantages and tries to hide the fact that 
there will be a charge.  I called DCU again and talked with the communications
department (doublespeak euphamism for complaint department). I talked with
someone who as usual was more concerned with talking faster than me than 
with listening and understanding the real issue. I said that the real issue
is that DCU is acting more and more like Bay Bank or Shawmut in attitude, 
behavior and charges - reasons that people quit those banks and came to DCU
(you know, people helping people, and all). I said that they should be 
honest, explain the real financial reasons for the change; better yet,
let the members know of the problem and possible solutions and ask for
input from members on the proposed solutions or other ideas for a solution
in advance of making any change. I said that there needed to be at least a 
clear statement in large print on the front of the pamphlet which says 
something like: 'WE ARE GOING TO CHARGE FOR CHECKING ACCOUNTS STARTING
on SEPTEMBER 1' but I was told over and over that the pamphlet CLEARLY 
explains the new charges - that nothing is hidden - everything is very 
obvious, etc. - and there was an implied message that the real problem is 
my low aptitude in english comprehension. I also asked for the DCU Board 
of Directors voting record on this issue and was told that their voting
record is confidential information but I could have
the names of the board members and contact them by sending them letters 
in c/o DCU. I was also told that the decision was a unanimous vote - I
guess that statement was to make it all sound more valid. My real intent
was to find out their voting record on this issue and then propose a recall 
election for those who voted in favor of it or at least a campaign to vote 
them out in the next election. I suggest that all DCU members complain by
contacting their board members directly either by phone or by mail. 

Now, presenting your DCU Board of Directors (complementary mail routing
and DTNs provided in case you want to send them mail or call them directly 
to voice your disapproval)

PICKET::STEINKRAUSS                    !MARK STEINKRAUS - CHAIRMAN 223-7182
CORMTS::INFANTE                        !DAN INFANTE       223-8488
ASABET::J_GIBSON                       !JEFF GIBSON       223-6865
POWDML::COBRIEN                        !CHARLENE OBRIEN   223-5056
HYPER::SSHAPIRO                        !SUSAN SHAPIRO     297-3527
ZONULE::RUGHEIMER                      !JACK RUGHEIMER    223-6330
MTS$::MKO::ABBOTT WEISS                !ABBOTT WEISS      264-5718


Subj:	take 1 minute and read this....then 2 min at the credit union
Subj:	The DCU
Subj:	DCU CHARGES
Subj:	DCU fees

headers removed-
From:	anonymous
Subj:	 DCU introduces new monthly fees from back door

In your recent DCU monthly mail, You might have seen a pamphlet describing
two great ways to have checking account with DCU, and new rate information.
The whole idea of this pamphlet is to try to draw your attention away from
the fact that now you will have to pay some monthly fees if your balance
drops below $1000 for any day of the  month. This is something you
never expect from a credit union. 
	Their argument is that there is a large number of inoperative accounts,
and the cost of operation of those accounts have to be paid by all members.
They can charge some fees on these accounts but instead of doing that,
they are going to impose a flat fee on all accounts with balance less than
$1000.
	You may or may not have heard that DCU's president recently ran 
away with 70 million dollars. We will now be paying on behalf of that president
in the form of monthly fees and increased fees on most other services.

	Credit unions are usually supposed to be well managed financial
organizations who offer low cost services to their members. 
	
	If you think that you should not be paying a monthly fee, I urge
you to go to DCU and voice your protest. All you have to do is to say
that you oppose this new change. They will write up a complaint form with
whatever you say. It will be a five minute task on your part, but if all
of us go there individually, and spread the message around, they will
be flooded with complaints and will have to take this fee away.


To Distribution List:
   (List Deleted)

    
    RE: .0
    
    That message was in ERROR.  Whoever originated it should send out a
    correction.
    
    DCU's former president was dismissed for allegedly bringing fraudulant
    participating loans to DCU over a 5 year time period.  They reached a
    maximum value of $18 million, NOT $70 million.  At least, this is what
    DCU has told us and appears to match what I have seen in the financial
    statements.
    
    If you have any doubt the fee increases are tied in any way to the
    losses on the participation loans consider these facts.  DCU's net income 
    in 1989 was $3,331,000.  DCU in 1990 was $290,000.  DCU's losses on bad
    loans to MEMBERS in 1989 was $173,000.  DCU's losses on bad loans to
    MEMBERS in 1990 was $283,000.  DCU's losses on bad participation loans
    in 1990 was $2,696,000.  In 1989, DCU allocated $240,000 to the bad
    loan allowance.  In 1990, DCU allocated $4,406,000 to the bad loan
    allowance.
    
    Let's do some what-if here.  What if DCU didn't have to cover large
    losses on these participation loans?  In 1990, they could have
    allocated $360,000 to the bad loan allowance.  Now this is a 50%
    increase over 1989.  That ONE change would result in DCU net income in
    1990 to be $4,336,000 instead of $290,000.  Instead of an 87% DROP in
    net income, DCU would have had a 30% INCREASE in net income.
    
    So why does DCU need to start charging fees and/or increasing minimums
    if they made over $4 million dollars last year?  I thought a credit
    union was a non-profit institution?  Of course this is a trick question. 
    Because while DCU did make over $4 million last year, they have salted
    it all away for what they KNOW is coming.  HUGE LOSSES on the
    participation loans.  Losses on loans to members has increased by an
    insignificant amount in comparison.  You must also realize that losses
    on loans is a normal operating expense of a CU or bank.  If you are
    selling produce, you expect and account for spoilage.  Loans are no
    different.  DCU had already been allocating money to cover their
    losses.  But when they suddenly realized that their largest loans were
    all rotting (produce analogy), the allowance was insufficient to cover 
    it and thus the $4,406,000 transfer to the bad loan allowance last year.  
    In 1990, they already have taken a loss of $2,696,000 on these loans.  
    I suspect 1991 will not be a good year either.
    
    I have gone through considerable trouble and taken considerable time to
    review DCU's finacial statements from it's birth right down to the
    current month's statement of condition.  I have also meet several times 
    with Harry Goralick, DCU Director of Finance & Operations, to get 
    answers to questions and gain an understanding of what has and is
    happening.  MUCH of the information I have collected has not typically
    been disclosed by DCU voluntarily.  If you ask for it, you'll probably
    get it.  But how many people have bothered to ask?  And know WHAT to
    ask?  I have a B.S. in Accounting and have operated a private business
    before so these statements are no mystery to me.  And I also know that
    the lack of a statement by the independent auditor is a flag.  But not 
    every DCU member has a background that allows them to read and interpret
    financial statements.  That's why the statements of DCU's senior
    management and BoD are SO important.  Those statements MUST be
    accurate AND complete.  I have found several instances where they are
    neither.
    
    While I understand most if not all memebrs will be more outraged at the
    result of the bad loans (the death of free checking), I wish more people 
    would sit up and take notice of why we are all in this situation to 
    begin with.  The DCU BoD, despite repeated statements to the contrary,
    "invested" our money in speculative real estate.  Personally, I take a
    more conservative view.  The BoD circumvented the loan examination
    policies in place at DCU and reviewed and approved loans to non-DCU members
    (trust companies).  Had these trust companies come directly to DCU to
    get these loans, they would have been DENIED them.  Why?  Because they
    are not within the field of membership of this credit union.  DCU's 
    participation in these loans was on average 85%.  We owned 85% of the
    risk.  Yet, DCU never verified the information it was given before 
    handing out $18,000,000.  And not one name was a DCU member.  IMO,
    DCU's BoD were acting as a bank and NOT a credit union.  While they
    knew they weren't doing anything illegal, they had to have known they 
    were engaging in loans that violated the intent and spirit of the 
    bylaws of DCU.