Conference 7.286::dcu

    Two questions:
    
    1.  What is this special Meeting Petition about?
    
    2.  Can someone point me to where it explains about Mangone and the
    	$70,000,000.00?
    
    
    Thanks
    
    js

 re: .1

>   Two questions:
>    
>    1.  What is this special Meeting Petition about?
>    
>    2.  Can someone point me to where it explains about Mangone and the
>    	$70,000,000.00?
    
1. This is an attempt to return control of the DCU to its members.

2. I don't know anything about $70,000,000.00 and Mangone.  However, Mangone, or
however his name is spelled, did bring $18,000,000.00 of participation loans
to the DCU.  This loans are now in  default.  Please see other notes in this
conference for more details.

Bob 

    Re .1:
    
>   Two questions:
>   
>   1.  What is this special Meeting Petition about?
    
    A number of people were not satisfied by what they heard at the first
    open meeting with the Board of Directors in August.  (The second is
    Tuesday, 10 September from 5:30-7:30 at the DCU Headquarters -- DON'T
    MISS IT!)  They have concluded that the present BoD does NOT represent
    the interests of the DCU membership.  The DCU Bylaws make it possible
    for members to call a special meeting, and this group intends to
    collect the necessary signatures to do so.
    
>   2.  Can someone point me to where it explains about Mangone and the
>   	$70,000,000.00?
    
    The actual amount loaned was $18 million in 12 "participation loans". 
    The $70M figure that has been batted about is BOGUS.  As it is, DCU
    stands to lose up to $8M of the amount loaned.  ($18M - $6M recovered
    from the bond on the former president - $4M in foreclosed real estate)
                                                                         

  Just out of curiosity... How many signatures do you need?

    Bob:
    
    I have spent a good deal of time reading this file.  But, we received
    a letter via A-1 that stated the amount was $70M.  When I didn't see
    that amount in here anywhere, that is why I raised the queston.
    
    But, thanks to the others who answered my questions!
    
    Jackie
    

    
    RE: .6
    
    That $70 million figure MAY be an estimate of Barnstable Credit Union
    losses.  I can't say for sure.  I've had all I can do to try and found
    out how much WE lost!  I've been told that the NCUA has filed a $47 million
    suit against some of the players at the Barnstable Credit Union
    (Mangone included).
    
    Anybody heard or seen anymore press releases on the Barnstable Credit
    Union?  Can anybody call one of the local papers down there and find
    out if there are any recent developments?  Barnstable and DCU had a lot
    in common.
    

    re: .6
    
    Jackie,
    
    If I sounded like I was flaming you, I wasn't and I apologize.  I only
    heard the $70M figure once, and it was quickly corrected.
    
    Bob

    If you'll mail me a petition form I'll get some CXN1 signatures on it.
    
    (When would you need it back, is Interoffice fast enough?)
    
    Richard Kittell
    CXN01-15

    
    I don't see MK0 on the list.
    Send me a petition I will circulate it here.
    
    CB Clark

	MSO cafe	Wednesday, September, 11	11:30-12:30
			Friday,    September, 13	11:30-12:30
    

    I don't see Franklin, Mass (FXO) on your list for the petition.....none
    of the facilities you list are closer than a half-hour one way
    ride.....what are the chances of getting the petition down
    here.....there are lots of willing signers I'm sure!!!
    
    Ron

    Do we have an agenda for this meeting yet?

.13>      Do we have an agenda for this meeting yet?


Yes.  It's printed on each and every petition form:

                         Agenda

      i.  A motion to rescind all changes to DCU
          "checking" (share draft) account terms,
          conditions, options, and fees made since
          August 1, 1991.

     ii.  Motions to remove all DCU Directors, under
          Article XIX, Section 3 of the DCU Bylaws.

    iii.  Call for new elections within 90 days of the
          special meeting to fill all Board of Directors
          positions, under Article VI of the DCU Bylaws.

    Based on the announcement by the new president at last night's meeting,
    I think it would be safe to remove item .i from the Agenda.

    re: -.1
    
    I thought so at first, too.  UNTIL I remembered that what the president
    said involved only one aspect of the accounts (the fee increases) and
    is only a temporary measure that still does not officially seek the
    approval of DCU membership.  Officially, the delay is so that an
    overall game plan can be determined.  Unofficially, they are responding
    to the outrage of shareholders who were given neither choice nor say in
    the matter.
    
    Steve

    Re .16:
    
>   Based on the announcement by the new president at last night's meeting,
>   I think it would be safe to remove item .i from the Agenda.
    
    Item i. is NOT moot.  Last night's announcement merely postponed the
    monthly service charge for the time being.  It left intact the rest of
    the fee structure changes.  It also left the BoD free to reverse itself
    at any time.
    
    It is not the intent of this motion (at least in my own mind, and I can
    speak authoritatively about it) to prohibit such fees forever.  It IS
    the intent of the motion to prevent the current BoD for enacting a
    half-baked fee-raising scheme that further damages the DCU.
    
    I am encouraged by the new DCU President's approach to evaluating the
    entire operation of the DCU with an eye toward providing a balance
    among his four central priorities:
    
    	1.  Attractive loan rates
    	2.  Attractive savings rates
    	3.  Effective service delivery (which I infer to include serious
    	    evaluation of branch/ATM/phone/mail tradeoffs)
    	4.  Financial stability
    
    Early returns indicate that the necessary 200 signatures to call a
    special meeting have already been received.  Signature collection will
    continue this week to provide both a buffer for invalid requests and a
    MANDATE from which to operate.  The special meeting must be called
    within 30 days of the presentation of the signatures.  7 days prior
    notice is required.
    
    Item iii calls for new elections within 90 days.  This period was
    selected to allow the standard election process to work, complete with
    a (neutral?) nominating committee and time for nomination by petition. 
    At this point, it is ESSENTIAL that the democratic process works.
    
    Since the new president intends to spend 3-4 months working on a
    comprehensive plan for the DCU, he'll probably be proposing any changes
    to the *NEW* BoD.  I'm optimistic that whatever fee changes he proposes
    will be both reasonable and well-justified to the BoD and membership.

    
	[Permission to forward and re-post this note is granted.]

							September 17, 1991

	DCU members,

	   I would like to thank all of you who made our special meeting
	petition drive a huge success.  The site volunteers were greeted
	with words of encouragement and thanks by DCU members.  It certainly
	made the experience especially gratifying for the site volunteers.

	   We needed 200 signatures to call a special meeting of DCU members.
	The final signature count was 1220!  We collected *6* times the number
	we required with little or no advance notice or publicity of this
	signature drive.  We owe this all to the enthusiasm and belief of
	many DCU members that things must change at DCU.

	   While we have taken an important step in the calling of a special
	meeting, but it is only the first step.  In order for change to occur
	at DCU, DCU members must attend the special meeting and make things 
	change by exercising their right to vote.  Your vote will never count
	more!  All DCU members may attend the special meeting.  You did not
	have to sign a petition.  If you are a DCU member, I strongly urge you
	to make time to attend the special meeting.  Your credit union will
	only be as good as you make it.

	   The special meeting must be called within 30 days of the delivery
	of the petitions to the DCU executive officer.  Delivery will occur
	today (Sept. 17) at 4 pm.  The special meeting will most likely be
	held in the greater Maynard area.  DCU must notify every DCU member
	of the date, time and place of the special meeting at least 7 days
	prior to the meeting.

	Again, thank you for your overwhelming support.  I hope to see you
	at the special meeting in October.

	Regards,
	Phil Gransewicz
    

       Thank You for all the time you've put into this Phil. I was unable
    to sign because I was on vacation. I WILL be at the special meeting!
    Will there be a slate of candidates to vote for at the meeting? Or will
    it just be to remove the present board?
                                         Denny

    
    RE: .20
    
    The third agenda item is a call for new elections.  We believe the
    elections should be completely open for all who wish to run.  NO
    Nominating Committee that has been hand picked by the BoD!  Selection
    by them has been termed "an endorsement".  Open the process up to ALL
    DCU members, let people running state their qualifications, priorities,
    goals, desires, etc.  Let DCU members decide who we will vote for.
    Why should 2 or 3 people start excluding people from the process? 
    
    Under the current circumstances, I believe this to be the best
    approach due to its complete openness and lack of influence by anybody
    (other than DCU voters).
    
    

    Unfortunately for those of us at remote sites, we are not able to
    attend the special meeting or vote.
    
    Gwen
    

What makes anyone here think that the only people allowed to vote will be those
at the meeting.  this is clearly not the way annual meeting is run. 

I would be highly upset if any attempt was made to disenfranchise me if I were
unable to attend the meeting in person.

There has been no showing of any credible candidates to replace the existing 
board.   Those who have indicated that we should be more lenient with member
loans are not representing my best interests.

The ballots that will have to be sent out will no doubt have an explanation and
a reccomendation on how to vote included with them.  As long as they continue 
in office they have a responsibility to do what is best for the DCU.

    My understanding is that those who attend the special meeting will
    decide the agenda issues.  No proxies, no mail-in votes count.  One of
    the items on the agenda involves possibly having new elections.  Those
    elections will involve mail-ins and such from all DCU members.
    
    Steve

re -1
yes but the BOD will have solicited Proxies from the total membership who 
normally grant it.    They are going to have all the votes in their pockets !

lets see 
40,000 proxies not returned
40,000 given to BOD
120 votes to remove BOD

Wanta take a guess how vote will come out ?

    RE: .23
    
    >What makes anyone here think that the only people allowed to vote will 
    >be those at the meeting.  this is clearly not the way annual meeting is 
    >run. 

    The Bylaws state so.  Proxies are not allowed.  The annual meeting is
    different than a special meeting in that a special meeting has a set
    agenda.  Only that agenda may be voted on.
    
>I would be highly upset if any attempt was made to disenfranchise me if I were
>unable to attend the meeting in person.
    
    Who is "disenfranchising" you?  I don't understand.

>There has been no showing of any credible candidates to replace the existing 
>board.   Those who have indicated that we should be more lenient with member
>loans are not representing my best interests.

    There are many people that have expressed interest in running for the
    BoD in here and to me privately.  You will be amazed at the number if
    open elections are held.
    
    After reading and reviewing DCU's financial statements I can tell you
    with certainty your second sentence is wrong.  Loans to DCU members
    have had an almost obscenely low default rate.  Even a Director
    commented about the fact that the rate was so low that they
    investigated their loan policies to see if they were being too
    stringent and not discriminating against certain groups.  There will
    always be bad loans.  The only way to have none is to not loan money. 
    DCU's huge losses of late have not been the work of its members.
    
>The ballots that will have to be sent out will no doubt have an explanation and
>a reccomendation on how to vote included with them.
    
    Why do you need anybody recommending to you how you should vote?  I
    don't understand this statement.  Each candidate will have a write-up
    and every one of us can then decide for themselves.  Traditionally the
    "*" besides an incumbents name has been the subliminal recommendation
    and has led to life-time directorships.
    
    >As long as they continue 
>in office they have a responsibility to do what is best for the DCU.
    
    Guess we all have different opinions on what is best for DCU at this
    point in time.  IMO, them continuing in office is not in the best
    interest of DCU for many reasons.  The senior management of DCU will be
    looking out for the best interests of the day-to-day running of DCU.
    

    Are DCU member default rates so low because DCU members are so
    trustworthy or because good screens are in place?

>    Are DCU member default rates so low because DCU members are so
>    trustworthy or because good screens are in place?
    
    My opinion?  Primarily the first.  DEC people are just good credit
    risks.  Ask all the institutions that DCU members have been going to
    for better 'choices'.  The few that I checked out had a visible glow
    when told of the happenings at DCU.
    
    As for the second, please remember the best screen is a wall.  But DCU
    isn't in the business of denying loans.  They have also increased their
    risk to bad loans by offering VISA cards.  These are lines of unsecured
    credit.  DCU has expanded into riskier types of services.  IMO, VISA
    and other unsecured credit defaults should be accounted for seperately
    since they should require more stringent qualifications.  People are
    more likely to skip paying the VISA bill than to miss the car or
    mortgage payment.  If DCU starts losing money on its VISA program due
    to high defaults, then the program should be dropped.  I doubt that is
    the case though.
    
    I will post the defaults and the amount of outstanding loans at the time
    from 1985 to 1990.  You can see for yourself.
    

�    I will post the defaults and the amount of outstanding loans at the time
�    from 1985 to 1990.  You can see for yourself.
    
    This won't really prove anything.  The question will still stand:  Does
    DCU have a low record of default to members because they are inherently
    good credit risks or because proper screening methods are in place?  I
    guess the only real way to find out would be to check the credit
    history of those who have been turned down by DCU.
    
    As for VISA being riskier, hopefully the DCU applies the same stringent
    credit check to VISA card applicants as they do for other loan
    applications.  Payback on VISA is higher as evidenced by the higher
    interest rate, there is the accompanying risk of unsecured credit as
    you pointed out.  There is also guaranteed yearly income with each card
    due to the yearly fee.

    RE: .29
    
>    This won't really prove anything.  The question will still stand:  Does
>    DCU have a low record of default to members because they are inherently
>    good credit risks or because proper screening methods are in place?  I
>    guess the only real way to find out would be to check the credit
>    history of those who have been turned down by DCU.
    
    Funny.  DCU seems to use these same default rates to justify increases?
    Why aren't they good enough here?  The metrics you propose cannot be
    compiled legally.  Maybe DCU should loosen some of its loan
    requirements or procedures a tad and see what the results are.  Or take
    a few risks on its members (instead of trust companies) and see what
    the results are?  You know?  Test market some looser criteria and see
    where it goes.  
    
    >As for VISA being riskier, hopefully the DCU applies the same stringent
>    credit check to VISA card applicants as they do for other loan
>    applications.  Payback on VISA is higher as evidenced by the higher
>    interest rate, there is the accompanying risk of unsecured credit as
>    you pointed out.  There is also guaranteed yearly income with each card
>    due to the yearly fee.

    I disagree.  Hopefully DCU is applying MORE stringent criteria to
    unsecured credit than it does to secured credit.  Yes, interestis
    higher as is the accompanying risk.  But payback is another story.  No
    way to determine payback unless you start tracking income and expense
    on a program by program basis.  I would hope this is being done.
    
    Also, there is not a guaranteed yearly income with each card.  Yearly
    fees are still waived.  With higher minimums now though.  
    
    Guess the bottom line is all loans are not created equal, as are
    borrowers.  I just hope DCU's loan guidelines aren't hard, carved in
    stone laws that result in people being turned away that otherwise have
    no reason to be turned away.  I'm not advocating making bad loans.  I
    am advocating examining the guidelines and criteria used.

re .29:  it's worth noting that not all screens are created equal.  Ideally,
the DCU screens out bad risks and lets through only good risks.  I suggest
that some of their procedures screen out very few bad risks, and mostly
act to screen out good risks.  "Loosening" those requirements is only to
the good.

Or to put it another way, you talk as if people are saying that the DCU 
should make more risky member loans.  I think the real message is that the
DCU should recognize the proven fact that member loans are not as risky
as their current procedures seem to assume -- and in particular, are not
as risky as some other usages the DCU has had for its money -- such as
VISA cards and Cape Code real estate.  It's not a choice between making
loans/investments and not making loans/investments -- it's a choice of
which ones to make.  Phil is saying (and I agree) that the DCU is making
the wrong ones if it wants to have financial stability and provide good
service to its members -- the new president's first two goals.

	Enjoy,
	Larry

Although tracking risk in programs of loans to members is important (and we
all are in agreement here, in spite of the fact that unavailability of
tracking data makes our discussions academic), I fear that the concentrated
focus of such discussions threatens to distort our judgment of reality, by
omitting:

   customer service.

Among the major things that have been wrong with our DCU is that it behaves
as though it believes  A) that it's a bank, and  B) that the function of
bankers is to develop and supervise systems of red tape.

I dunno whether I'm a good credit risk.  But when we re-financed the house
DCU said I was qualified, and offered to write the loan.  Trouble was, by
the time they made a decision there had been so many lost papers, so many
tedious phone calls, and such a burden of implication that the customer is
there to serve the bureaucrats that we'd had to give up on DCU.  They finally
called with approval two weeks after we'd CLOSED with a commercial mortgage
company.  The latter had sent a rep OUT TO US to take the application, was
eager and friendly throughout, and hustled to get things done.  We got a
quarter percentage point better interest rate than DCU was quoting, too.

So these theoretical discussions are fine, and they may provide some helpful
reading for members of the new Board.  But DCU has serious problems, and the
problems are in no way due to defaults on loans to members.  <<mild flame>> I
fail to see any need to spend time or energy on fixing non-problems while
terminally cancerous conditions go untreated.  <<flame off.  sorry.>>

If DCU cannot be friendlier to members than are commercial institutions, it
isn't a credit union and deserves to go under.  This goes for loan procedures,
openness in annual reports, policy in loaning members' money to outsiders,
and election procedures.

Once we have a credit union again it may be worth re-visiting risk in member
loans.  If, however, we fail to turn our institution around, it (and all these
discussions) will sink gradually into irrelevancy:  just another stuffed-shirt
bank.

re: .32

I agree with you 100%.  I had a similar story with a new car loan a few years
ago.  After a week or so of putting up with the DCU B.S., I went to another
credit union and had loan approval in 24 hours and picked up my car before
DCU said yes.

Bob

    Most of the complaints I've seen in here about DCU loan approvals stem
    from incidents that happened a few years ago.  Anyone have recent
    input?
    
    I applied for a mortgage with DCU in June.  They were most helpful in a
    situation where the seller was causing many delays.  As a result of the
    efforts of DCU, closing was only 1 week later than the originally
    scheduled date.  The rates were as good or better than other area
    banks.

	I tried to re-finance a mortgage a couple months ago.
	DCU wouldn't even take my application.

					Tom_K

    
    Re: .32
    
    Amen!  AMen!!  AMEn!!!  AMEN!!!!
    
    This is precisely what has bugged me about DCU for sometime.
    They should NOT be thinking of themselves as a financial institution,
    but as a customer service institution.
    
    I think there is much overwhelming evidence that they do have the
    "bank" mindset.  IMO, That by itself is what is contributing the
    most to their current troubles.
    
    Steve

    
    Are any of you surprised DCU acts as a bank???  I believe they compare
    themselves to banks when they do their "are we competitive" surveys. 
    We were supposed to see the details of these surveys but the info
    hasn't appeared.
    
    I also find it no small coincidence that 2 of the 7 BoD are ex-bankers. 
    And they are two of the most influential.  After reviewing DCU
    literature and annual reports for its entire existence, I saw an 
    interesting transformation when one of these ex-bankers ascended to the
    highest position of the BoD.  The words "best rates" became "competitive
    rates", etc.  This was also when DCU started keeping all its net income
    as retained equity instead of returning portions of it to the members
    as had been done in all of the previous years.
    
    Its been happening for years.  We have just been too smitten with the
    convenience of on-site service to care that our credit union became a
    bank.  Well, its time to either turn the credit union back to a credit
    union or rename the damn thing to the Bank of Digital.
    
    Let me quote from the DCU Bylaws, Article 9 (Credit Committee), Section
    6:
    
    	".... The credit committee and its appointed loan officers shall
    endeavor diligently to assist applicants in solving their financial
    problems."
    
    The policies, philosophy and direction of a credit union is set at
    the top, communicated down the organization and implemented.  We
    need new Directors that understand the importance of this.  Hard, cold
    numbers aren't everything.  And I fear that is what we have become to
    them.
    

re: .34

 >   Most of the complaints I've seen in here about DCU loan approvals stem
 >   from incidents that happened a few years ago.  Anyone have recent
 >   input?

Yes, they are a few years ago and it seems a lot of us have a long memory.
I haven't seen or heard anything to make me want to even try again.
It will take a 180 degree change in attitude at DCU combined with below market
interest rates for me to even think about a loan from DCU.

Bob
 

    Actually, I got a 20 hour car loan approval from DCU in the spring of
    '90.
    
    The irony is that the car was on order, so I didn't need the money for
    six weeks.  Still, it was 20 hours from application to approval.  Not
    quite as quick as what you get at the dealer, but it was significantly
    lower in interest rate (9.9% compared to the 13% the dealer was quoting
    me).  I probably could have done better at a bank, but it didn't seem
    like it was worth the bother.

RE:.37 by GUFFAW::GRANSEWICZ "Someday, DCU will be a credit union."

> The words "best rates" became "competitive rates", etc.  

Regardless of how good of rates DCU has,  there is sure to be someplace with
better rates.  Like some brain-dead S&L or bank due to be closed this Friday 
or next.


> This was also when DCU started keeping all its net income as retained 
> equity instead of returning portions of it to the members as had been done 
> in all of the previous years.

Credit unions are required to build up some percentage of ratained equity.  I
don't think DCU has had enough retained equity to pay dividends for years.


Phil

    
RE: .40
> The words "best rates" became "competitive rates", etc.  
>>Regardless of how good of rates DCU has,  there is sure to be someplace with
>>better rates.  Like some brain-dead S&L or bank due to be closed this Friday 
>>or next.

    	Absolutely.  I'm definitely not advocating a brain-dead policy of
    reckless rate setting.  But a credit union should be able to offer its
    members some advantages.  Otherwise, what is the reason for its
    existence?

> This was also when DCU started keeping all its net income as retained 
> equity instead of returning portions of it to the members as had been done 
> in all of the previous years.
>>Credit unions are required to build up some percentage of ratained equity.  I
>>don't think DCU has had enough retained equity to pay dividends for years.
    
    They have stated the "guidelines" they use and we've discussed them in
    here (not sure if its been in this note though).  Given DCU's growth in
    assets and its growth in net income, DCU would never hit the magical
    percentage.  But if a lot of people left DCU and left behind all the
    profit DCU made on them over the years (equity), while taking their 
    deposits, that is a different situation.  I'm not saying that is what 
    DCU had in mind.  But it certainly appears to be what has happened.
    
    DCU is (or was) a very stable and secure credit union.  They were and
    still are making money on us.  $3.3 million in 1989, over $4 million in
    1990.  How much money does this credit union need to make and keep in
    pursuit of a "guideline".  We were fine before the huge loan losses. 
    Now we have to make up the money the BoD "invested" for us.
    
    I'm advocating a slower growth of equity of the years.  Not a hand over
    fist collection from the DCU membership.  As long as the CU invests in
    *US*, our equity is safe.  The BoD strayed from that very basic of
    credit union principles and it cost us all dearly.  We should not be
    expected to make it up overnight.