| T.R | Title | User | Personal
Name | Date | Lines |
|---|
| 337.1 | comment on 333.34 and .40 | RGB::SEILER | Larry Seiler | Fri Oct 25 1991 16:02 | 36 |
| Note 333.34 makes the point that the participation loans started in the
80's, when many things were done (like junk bonds) that are now obviously
bad ideas. Note 333.40 points out that the "investments" were kept to a
small percentage of our total assets.
I have several problems with those as excuses for the DCU getting involved
in those particular loans.
First, it was apparent to *me* in 1980 that junk bonds were very risky
(to put it no more strongly). I would assume that a board that says
they invest in conservative instruments would have a better sense than
me of whether a given loan is conservative. Note, though, that the Board
never said that junk bonds weren't risky -- but I think the same argument
applies to commercial real estate loans made on Cape Code from 1985-1990.
Second, every time I've heard the board talk about these loans, they point
out that things looked different in 1985. That's true -- but new loans
were made for years after 1985 -- all the way to 1990? The board is being
deceptive when they focus on 1985 as the time at which we should consider
whether the loans were a good idea. I knew in 1988 that real estate prices
were going down, and though I didn't know that they'd keep going down until
the present date, I think the board should discuss how things looked in
1988 and later when they discuss the participation loans.
Finally, talking about how only a small percentage of our portfolio was
tied up in these loans hides an important point. That is that we had
bought the lion's share of a series of loans all made to the same small
group of people. To make an analogy, an auto loan each to 10 DCU members
is far less risky than 10 auto loans to a single DCU member, even if that
member purports to have the money to buy 10 cars, because if that one
person gets into trouble, all 10 loans are at risk. It's much less likely
that something could mess up loans to 10 different people.
Enjoy,
Larry
|
| 337.2 | | BEATLE::REILLY | So I rewired it... | Fri Oct 25 1991 16:08 | 16 |
|
333.39 (me)
� But the DCU claimed themselves that they wouldn't do that sort of
� investing.
333.40 (CNTROL::MACNEAL)
� Also remember that the risk of these loans wasn't completely ignored.
� A very small percentage of DCU's investments was tied up in real
� estate.
So what? It was a "small percentage" lie, then. But still a lie. Are
you saying you don't mind if DCU lies to you?
- Sean
|
| 337.3 | | ALPHA::gillett | And you may ask yourself, 'How do I work this?' | Fri Oct 25 1991 17:29 | 90 |
|
As I review some of the documentation floating around regarding the
participation loan deal, the Mangone situation, and the BCCU debacle, I keep
reminding myself that all this is fallout from the 1980's. I try to keep
in perspective that the "Greed is Good" mentality that seemed to affect
everything from banks and S&Ls to brokerage houses. The 1980's were truly the
decade of the LBO, of arbitrage, and of vastly over-inflated real estate values.
As I examine the documents I'm also mindful that DCU came out of this mess
intact....a few million poorer perhaps, but nevertheless still open for
business. DCU certainly weathered the storm better than BCCU, or some of the
local banks that went belly-up during the fallout.
On the other hand, I'm also mindful of the fact that the Board of Directors
approved the loans - while during the same time frame their Chairman wrote
to us that our money was being conservatively invested in other banks and that
there was no speculation going on. I'm mindful that critical notes to
financial statements - notes that would have brought DCU's real estate
speculation into focus - were withheld from the membership. I'm mindful of
the fact that reasonable and prudent requests for disclosure of information
have been delayed and denied.
I'm mindful that the fraud that was perpetrated on DCU could and would have
been avoided if the BoD, who approved the loans, looked a little deeper than
the paperwork provided by BCCU. And I find myself in a position to give
very little trust to the Board.
A previous noter commented that there was very little money lost compared with
the total amount held by DCU in investments. This is true, and I'm glad that
this is the case. But if somebody robs a liquor store it doesn't matter
whether he stole $5 or $5000 - he's still in trouble. Wrong is wrong. A lie
is a lie.
If memory serves, the stock market crashed in October of 1987. At the time of
the crash, the economy, urged on by Reagan administration defense spending,
was on a huge uptick. But after the crash, everything began to turn around.
Housing markets, jobs, the whole 9 yards began to slip. The cyclical theorists
and technical analysts predicted it, the fundamental analysis of how many
dollars were chasing how little equity proved it out. It took a little
expertise to see the crash and recession following before it hit. It didn't
take any intelligence at all to see that we were clearly having hard times
within a year of the crash.
But here is the situation at DCU. According the the legal papers, of the
participation loans in question, $11,000,000 was loaned between 04/30/87 and
10/08/87. But between 03/02/88 and 06/19/90 they loaned an additional
$17,029,000. That's $6,425,000 in 1988, $4,800,000 in 1989, and $5,804,000
in 1990.
I moved from Michigan to Massachusetts in August of 1989. It was clear by
then that New England was in serious trouble. Digital had a hiring freeze
on, and there were the first murmurings of massive downscaling of the work
force. Housing prices were on the decline, rental rate were dropping and
vacancy rates were increasing. Yet DCU put another $10.6 million into
the real estate market during those declining times.
I foresaw the oncoming stock market crash, and ensuing economic difficulties
before they happened. A friend of mind prognosticated one evening over a
couple of beers that the good times would be coming to end by 1989. Neither
one of us were economists, or MBA's from Wharton, or bankers with years of
experience - just a couple of guys who saw the writing on the wall.
So, how can our Board, with all their years of banking experience, their
detailed and in-depth understanding of macroeconomics and economic trends,
their MBA's and deep knowledge of the financial world, blunder into such
a mess? While the banking industry began to suffer from real estate loans,
while S&L's dropped dead all over the country because of bad real estate
investments, DCU CONTINUED to loan money for real estate development.
How can we trust people who kept loaning money long after the economy
begane to fall apart? How can we trust people who supposedly got taken in
hook, line, and sinker, by a scheme to defraud that would have easily been
unraveled if somebody had picked up the phone, called TRW, and gotten a
credit report on a couple of the applicants? They hold themselves out as
experts in economics and business, but failed to see an oncoming recession?
They hold themselves out as experts in banking and finance but failed to
see a fairly blatant and obvious attempt to defraud?
Sorry guys, I don't buy it. The best solution is to vote them all out, and
let the ones who have the stomach for it run again along with others who
are qualified and want to run. I'll give support to a former board member
who wants to be on the board again and holds forthright meetings with members
to discuss her/his (financial) philosophy, policies, and beliefs. I can
support a candidate who opposed the participation loans, and who counseled
and advised against real estate participation.
Trust is indeed a difficult thing to get back once you've lost it. Loss of
trust seems to be a central issue in this dispute.
/chris
|
| 337.4 | | STAR::BANKS | Lady Hacker, P.I. | Fri Oct 25 1991 18:05 | 13 |
| Actually, I predicted the New England real estate "crash" back in '85, both the
magnitude and timing. It wasn't because I was a genius, but because I'd just
lived through the same thing back in Colorado, and New England was playing from
the same script, just 5-10 years behind Colorado.
I can understand how the BoD got into the loans originally. That was back in
the "you can't lose money in real estate" years - or so said common wisdom.
Even as late as 1989, there was no problem finding people who said that, even
as the market was sliding.
I'm no economist or genius, either. I just had the benefit of experience. More
useful experience, it would seem, than that demonstrated by the ex-prez and
possibly the BoD. That's what depresses me.
|
| 337.5 | Errors past and current | 11SRUS::SCONCE | Bill Sconce | Mon Oct 28 1991 10:11 | 17 |
| And I predicted the '87 stock market "crash" back in '87 -- in time to get
out. But to paraphrase Counsellor Troi, I could just as easily have been
wrong. Crystal balls are very unreliable.
A bad loan decision or two would normally be forgiveable. If the BoD had been
forthcoming, and shown a willingness to deal openly with the membership about
its management record, it would have been one thing to "forgive" the Board's
behavior. But the Board is today in trouble with its shareholders for TWO
reasons: 1) some possibly-flawed loan decisions, and 2) ITS SUBSEQUENT
BEHAVIOR. The former might have been "forgiveable" -- as several writers
have observed, the 1980s were different times.
But the subsequent behavior (stonewalling, hiding of information, consistently
arrogant response to shareholder inquiries) is grounds for removal of a Board
in ANY times. (And for the Board of almost any organization.) The effect on
DCU's viability of the Board's unforthcoming posture now overshadows that of
its Mangone dealings.
|
| 337.6 | | WLDBIL::KILGORE | DCU Meeting, see BEIRUT::DCU | Mon Oct 28 1991 12:55 | 11 |
|
Re: 333.43, 333.47:
Having remained as impartial as possible in 333, I just wanted to state
here that I believe the Directors have had ample opportunity do
differentiate themselves with regard to the questions at hand, and have
steadfastly refused to do so. This being the case, and not wishing to
drag out the meeting any longer than it absolutely has to be, I will
vote against an amendment to divide the question on removal of the
Board of Directors.
|
| 337.7 | The entire membership deserves to vote on the selection | 11SRUS::SCONCE | Bill Sconce | Tue Oct 29 1991 11:02 | 20 |
| .6> Having remained as impartial as possible in 333, I just wanted to state
.6> here that I believe the Directors have had ample opportunity do
.6> differentiate themselves with regard to the questions at hand, and have
.6> steadfastly refused to do so. This being the case, and not wishing to
.6> drag out the meeting any longer than it absolutely has to be, I will
.6> vote against an amendment to divide the question on removal of the
.6> Board of Directors.
Same here. Not only do we not want to drag out the meeting, it is
inappropriate for the inevitably small (percentage-wise) number of members
who will be able to attend in person on the 12th to decide for the 80+
thousands who will not be there which directors, if any, to keep.
The only right thing is to turn them all out, and let them all run for
re-election, if they so desire. That way the entire membership of DCU gets
to vote.
We who plan to attend on the 12th owe it to all the other members NOT to
consider individual resumes.
|
| 337.8 | | GUFFAW::GRANSEWICZ | Someday, DCU will be a credit union. | Tue Oct 29 1991 12:14 | 70 |
|
RE: 333.49 STOKES::NEVIN -< more on context >-
> Any investment or loan entails some degree of risk. In general
> the rate of return on the investment roughly compensates the investor
> for the risk. It therefore is sensible to have investments with
This is reasonable. But I'm not sure 1 or 2 points above prime rate
(with a point up front) was comensurate with the risk of real estate
speculation. Loans made in a down market (after 1989?) are the purest
of speculation.
> varying degrees of risk. In the context of the 80's, the higher
> rate of return investments did not look that risky, and in the context
> of the 80's the decisions by the BoD were not as bad as they look
> now in hindsight. Clearly they were poor judgement, but at the
> time, they did not appear to be so. There were very few financial
> institutions in the area that did not get burned by bad real estate
> loans in the late 80's and early 90's.
True again, with a bad IF. IF you believe DCU had any business
"investing" or loaning members money for this purpose. People must
also keep in mid the context of the institution we are discussing here.
It is a CREDIT UNION. It is not a bank, an S&L, a commercial bank,
etc. The very essence of what makes it a credit union would dictate
that these loans were not for the benefit of the membership since day
1.
>While it would have been
> great if the BoD had forseen this problem and loaned to only VERY
> secure investments, the fact that they did not do so only means
> that they were about average for the times.
But a very big problem with this whole mess is the statements made by
DCU, and Mark Steinkrauss in particular, that DCU DID only invest in
safe and conservative investments. In my eyes, this was concealment of
these loans or "investments". "Investing" in hotels, commercial
property and residential housing on Cape Cod is something that falls
into no stated category of DCU investment.
> For the future, yes, I think more cautious investing is wise, but
> if we swing the pendulum too far the other way, we can be overly
> cautious and significantly reduce the income which the DCU so badly
> needs.
Sorry, absolutely disagree. DCU needs to loosen it grip on the $120
million that it currently has parked for "investment" in its
membership. We are the best, safest and most conservative "investment"
going. I rest my case on the VERY low default rate of DCU members.
Even the new DCU President appears to realize this. A refreshing
change from the finger of blame the members got from the BoD and the
first informal discussion (we weren't borrowing money so they had to do
something with it). DCU members have been trying to borrow from DCU,
have been turned down only to get money someplace else with no trouble.
Hopefully that will change for everybody's benefit.
> In short, I would like to retain at least some people with significant
> business experience on the BoD. Perhaps a combination of very
> experienced people, along with some "normal members" would allow
> for good business decisions as well as good communication with member
> needs.
I agree with others. All of the current BoD should run for their
positions again if they wish to retain them. Besides, I'm not sure
there are any board members with "significant business experience".
Personally, I'm looking for directors with a credit union frame of
mind and direction. We're paying the credit unions senior management
for their financial and business skills.
|
| 337.9 | And the membership did vote. | NECVAX::HUTCHINSON | | Tue Oct 29 1991 12:17 | 59 |
|
From .7
"Not only do we not want to drag out the meeting, it is
inappropriate for the inevitably small (percentage-wise) number
of members who will be able to attend in person on the 12th to decide
for the 80+ thousands who will not be there which directors, if any,
to keep."
>> Under the by-laws as I read them, the members who attend do
have the responsibility to make decisions for the whole membership,
and we will be doing that. I believe that the fact that many
members cannot attend only magnifies the responsibility of those
present to make wise choices for DECU. Each will have an opinion
about what it is appropriate for us to do. We may not agree
- but we have a process to decide.
"The only right thing is to turn them all out, and let them all run
for re-election, if they so desire. That way the entire membership
of DCU gets to vote."
>> I do not know what the "only right thing to do" is. Three factors
in particular bear on this question for me:
1. I believe that this board was elected by a vote open to the
entire membership, so by the reasoning of limited member
participation at this meeting, I would err on the side of
keeping the elected board in place. Seems to me the most
extreme position to say to those who voted, "You were wrong
in every case." Perhaps it's right, but it is not
self-evident to me.
2. I do not know the consequences for DECU of having no
members on the BoD. It may be that by removing them all
we would cause them all to continue to sit until a
successor board is elected and qualified. Or, we may
create a situation for which there is no provision in
the by-laws. I do not know. Has any noter researched
this?
3. There is specific provision in the by-laws for removal
of "any director, committee member or officer of this
credit union." It stipulates "only after an opportunity
has been given for him to be heard", and seems to me
intended for the removal of individuals. In reading through
the by-laws, I did not find a provision for the removal
of a board as a whole. It may be that we can only
consider removal individually. Is there any more information
on this?
I appreciate that some members have been working to improve DECU
for several months, have more experience and information, and considerable
frustration. I am among those who are new to these issues and trying
to learn enough to participate knowledgably. I hope the veterans will be
patient with us.
Jack
|
| 337.10 | | GUFFAW::GRANSEWICZ | Someday, DCU will be a credit union. | Tue Oct 29 1991 12:42 | 27 |
| RE: .9
> 1. I believe that this board was elected by a vote open to the
> entire membership, so by the reasoning of limited member
> participation at this meeting, I would err on the side of
> keeping the elected board in place. Seems to me the most
> extreme position to say to those who voted, "You were wrong
> in every case." Perhaps it's right, but it is not
> self-evident to me.
Few people vote each year (probably will change dramatically this
year). Current directors have received more votes than others who ran.
The number of petitions signed and submitted was a significant amount
when compared to the number of members who voted. If we tried to
collect as many signatures as we could instead of collecting enough to
cover the requirements to call the special meeting, we could have
gotten many more signatures. It just reached a point of overkill. The
fact that DCU now says its a small number of members that called the
meeting is its usual deceitful communications. They should be stating
the number of petitions submitted and let the people reading or
listening decide if its a small number. Now I'm really straying from
my point!
The point is the current board can not boast of a mandate from a
majority of the membership. Therefore I do not see any mandate for
retaining them. If they are returned to their positions by DCU members
who have been given complete and accurate information, then so be it.
|
| 337.11 | | VERGA::WELLCOME | Steve Wellcome (Maynard) | Thu Oct 31 1991 14:46 | 9 |
| Re: those who argue that "everybody was doing it" (real estate
loans) in the 80's...
Everybody was NOT doing it in the 80's. I had my first mortgage
with Worker's Credit Union of Fitchburg. When I bought a new
house in 1982, they were no longer giving mortgages. Now, WCU is/was,
I expect, a lot smaller than DCU so the parameters of what is "reasonable"
for them to undertake are no doubt different.
Nevertheless, WCU got out of the mortage business in the early 80's.
|
| 337.12 | DCU context of loans | GUFFAW::GRANSEWICZ | Someday, DCU will be a credit union. | Thu Oct 31 1991 14:51 | 205 |
|
To the context discussion I would like to contribute this DCU context.
Long time DCU conference readers may choose to pass over this but it
may help a lot a new readers understand some of what has happened.
This was posted as a response in the DIGITAL notes conference.
[Permission to forward or re-post this note is granted. However, the
original note header and names at the end of the message must be
retained. The contents of the note may be shared with any DCU member.]
I can document with cold, hard facts that the BoD concealed the
existence of the participation loans for 6 years by excluding the
auditors notes to the financial statements. The last year that the
notes appeared in the financial reports was 1984, the year before
DCU signed a "Participation Agreement" with Barnstable Community
Credit Union. In fact, DCU may not have even printed and made
available an annual report for 1985. The line at the bottom of the
page of the 1984 annual report states:
"The accompanying notes are an integral part of these financial
statements."
In fact, the auditors statement concerning the financial reports has
been excluded from DCU annual reports from 1985-1990 because DCU does
not publish the notes. This says a LOT about the information in those
notes. Without them, the financial statements you are viewing aren't
complete and can therefore not be relied on.
In 1987 while DCU has $9.8 million dollars invested in loans
to real estate trusts on Cape Cod, Mark Steinkrauss, Chairman of the
Board, made the following statement in a letter to the membership:
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
'Q. How does DCU invest its money?'
'A. Because we view DCU as the guardian of members' savings we are
very conservative in our investment policies. We reinvest savings in
member loans. Additional investments are in government securities and
federally insured banks. We deal with the highest quality financial
institutions and don't invest in any sort of "speculative" instruments.'
(Note: Quotes around the word speculative are in the original letter.)
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Source: Copied from DCU Annual Reports 1985-1990. This information was
contained in the auditors notes. The auditors notes were not
published with the DCU Annual Reports.
Loans Outstanding: (in thousands)
1985 1986 1987 1988 1989 1990
------ ------ ------ ------ ------ ------
Automobile 32,962 51,452 44,384 39,803 34,955 33,510
Mortgage 25,845 74,557 70,691 72,822 69,723 71,553
Home Equity -- -- 43,338 63,441 81,203 89,457
Other Secured 3,463 6,082 6,459 7,212 6,411 5,096
Unsecured 15,124 9,820 15,073 21,153 35,706 39,721
Participation loans 2,520 8,010 9,886 -- -- --
with other CU *
Commercial RE loans * -- -- -- 12,766 15,332 8,727
* = Description of participation loans changed to Commercial RE loans.
(Note: Participation loans reached a high of $18 million in 1990.)
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Then around July of 1990 the first default on these loans occurred.
By the end of 1990, DCU had foreclosed or substitantly repossessed about
$6 million in property that secured these loans. In 1990, DCU had
already charged off $2.6 million in losses associated with these
participation loans. Yet no mention of this significant financial
information was made in the 1990 annual report. But the auditors saw
it significant enough to include the following notes to the 1990 annual
report. (Notes that have not been made available to the DCU
membership).
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Source: Copied from DCU Annual Reports 1985-1990. This information was
contained in the auditors notes. The auditors notes were not
published with the DCU Annual Reports.
Allowance for Loan Losses: (in thousands)
1985 1986 1987 1988 1989 1990
----- ----- ----- ----- ----- -----
Balance, Beg. Year 540 1161 1159 1272 1429 1533
Provision Charged to 747 243 240 240 240 4406
Operations
Loans charged off (members) (130) (284) (187) (140) (173) (283)
Paricipation loans (2696)
Charged Off
Recoveries 4 39 60 57 37 21
Balance, End Year 1161 1159 1272 1429 1533 2981
(Note: $2,696,000 loss on participation loans in 1990.)
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
" (3) Loans
The credit union grants home equity loans, residential loans and
consumer loans to members. The credit union also participates in
commercial real estate loans primarily in the Cape Cod region.
Approximately 67% of the loans granted by the credit union are
secured by real estate. The ability and willingness of the home
equity, single family residential and consumer borrowers to honor their
repayment commitments is generally dependent on the level of overall
economic activity within the borrowers geographic areas and real estate
values. The ability and willingness of commercial real estate borrowers
to honor their repayment commitments is generally dependent on the
health of the real estate economic environment in the borrowers
geographic areas and the general economy."
"Real Estate Acquired by Foreclosure or Substantively Repossessed
----------------------------------------------------------------
Real estate acquired by foreclosure or substantively repossessed is as
follows:
Dec. 31 1990
------------
Land $4,131,000
Commercial Real Estate 2,562,000
----------
$6,693,000
At December 31, 1990, real estate acquired by foreclosure or
substantively repossessed included approximately $5,668,000 of
properties that were substantively repossessed."
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Contrast the above information with some of the statements made in
the 1990 annual report. DCU's net income for 1990 dropped 87% from
what it was in 1989, yet "DCU's financial performance improved".
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
"We will continue our prudent lending and investment practices so that
our members' investments remain safe and sound." (M. Steinkrauss, Chairman)
"Finally, as we progress through 1991, we will continue to focus on the
security of funds while providing our members with the best possible
service." (M. Steinkrauss, Chairman)
"As the industry reported unprecedented losses, DCU's financial
performance improved with Net Income for 1990, on target at .8% or $.3
million. We maintain a conservation cash position and invest in only
the highest quality money-market investments." (S. Shapiro, Treasurer)
"Most of our earnings were placed in reserves as we anticipate
continued pressure on the real estate market, especially in New
England." (S. Shapiro, Treasurer)
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
To make matters worse, Mr. Mangone simply instructed a DCU employee in
June of 1990 to tranfer $3,523,915 to Barnstable Credit Union. This
fact went undetected or unacted upon by the BoD until they filed a
civil suit against Mr. Mangone. My question is "How could the largest
loan transfer in DCU's history have been made without the proper
authorizations." This indicates a complete lack of checks and
balances in the system the BoD had set up to "invest" in these loans.
On October 25, 1990, DCU received a summons from Barnstable
Superior Court attaching all of Mr. Mangone's funds at DCU. On
November 7, 1990, Ann McAdoo, Senior Operations Manager responded to
the summons stating that a total of $44.16 had been attached. I
have yet to obtain a copy of the court case which resulted in this
attachment. The fact that the President of DCU had been named in a
multi-million dollar civil suit should have warranted SOME kind of
inquiry on the part of the BoD in my eyes.
Yet, the DCU Board of Directors failed to notice or act on any of
this. The only thing we have been told they did was ask Mr.
Mangone "to work the loans". Now, he is the same person who sold these
loans to the BoD in the first place. Was this an appropriate response?
The DCU Board of Directors claims that their first knowledge that
fraud was involved was March of 1991, when the NCUA shutdown Barnstable
Credit Union. Yet it still took the Board of Directors until April 5th
to remove Mr. Mangone. I suggest to you that DCU's Board of Directors
had many glaring danger flags concerning these loans and Mr. Mangone
long before March of 1991.
They claim people have acused them of fraud. That is incorrect.
What people have accused them of is mismanagement and not exercising
due care. The facts above tell me that the BoD was either asleep at
the wheel or failed to act appropriately given the significant amount
of DCU money involved. Given this past history, I can not honestly
trust these same people to continue on the Board of the credit union
that I entrust with my money. The BoD's actions subsequent to all this
has been one of stonewalling, denial of responsibility, and
non-disclosure of data. Their actions have contributed to a general
lack of trust on the part of many members.
If you have any questions or requiring clarification of any of this
information, please feel free to contact me.
Regards,
Phil
|
| 337.13 | | VERGA::WELLCOME | Steve Wellcome (Maynard) | Thu Oct 31 1991 15:17 | 21 |
| So they won't give us the names of the people who are "bombarding
them with requests for information." Will they tell us how many
requests for information constitutes a "bombardment"?
10? 100? 1000? 2?
So they won't give us the details of Mangone's mortgage that seems
to have a remarkably low monthly payment, except to say that it's a kind
available to all DCU members, citing Mangone's right to privacy.
Fine; I respect his right to privacy. But assuming it's a mortgage
"anyone" can get, if I walked in and asked for a mortage of X amount
(whatever Mangone's mortgage was), I assume they could describe to me
the terms of a mortgage that would result in me paying Y per month,
whatever it was that Mangone paid. They wouldn't tell me the terms
were a secret because they granted a similar mortgage to Mangone.
Can somebody from DCU tell me how I can get a mortgage of X from DCU
and pay Y per month? (Filling in the X and Y Phil found in the court
record.) I'm assuming here that it can be done; I assume there is a
rational explanation; I assume there is in fact no "special deal."
I assume that asking DCU to explain their mortage terms to me, a
member and potential mortgagee, is not "bombarding them with inquiries."
|
| 337.14 | Where you waiting? | STAR::BUDA | Lighting fuses as I go | Thu Oct 31 1991 16:56 | 11 |
| >So they won't give us the names of the people who are "bombarding
>them with requests for information." Will they tell us how many
>requests for information constitutes a "bombardment"?
>10? 100? 1000? 2?
How many did not ask for much and were waiting to get it from people
who did request? I think there were more people waiting to share
information with each other, than what people realize.
- mark
|
| 337.15 | Quantity of inundators | PLOUGH::KINZELMAN | Paul Kinzelman | Thu Oct 31 1991 17:30 | 5 |
| I got Chuck Cockburn to say the number of people "inundating" DCU with
requests was 6 to 10 (during his meet-the-prez-at-MLO on 10/28). I
believe his charge is not true. I know the folks most likely to be
doing that and they aren't. He also refused to offer any corroborating
evidence to back up his assertion. He got very huffy when I pushed him.
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| 337.16 | Herring deluxe | GUFFAW::GRANSEWICZ | Someday, DCU will be a credit union. | Fri Nov 01 1991 09:45 | 21 |
|
The fact of the matter is that I was probably the only one asking for
information. I would then enter it here and everybody had access to
it. Seems like a pretty efficient distribution channel. NONE of my
requests for information were frivolous and had very valid reasons.
Then DCU stopped releasing information and forced everybody to submit
requests. Now many others are asking for information. Sounds like
another smart business decision by our credit union.
Again, Mr. Cockburn is spreading this red herring around the membership
and I do hold him responsible for this. Along with him saying these
information requests cost all members money (pitting members against
members) and insinuating these requests are nothing but harassment by a
small group of people, he is going way over the line. He should be
pushed on this issue at every site visit to expose the lies he has
been spreading while using DEC facilities. The fact of the matter is
that information which DCU has disclosed has been very damaging to the
BoD. So they now deny information to prevent more damage. A truly
dangerous precedent that we should not allow to go unchallenged.
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| 337.17 | No good reason to vote for BoD | PLOUGH::KINZELMAN | Paul Kinzelman | Tue Nov 05 1991 17:06 | 34 |
| This is in response to 333.54 I believe concerning voting not to remove
the board, by Mike Glantz.
First off, *my* only vested interest is that DCU BoD are at best,
incompetent, my money is in there, and I'd like to get the message
across that I'm *very* dissatisfied. That's it. I believe the same is
true for the others helping out in this effort.
As people have noted elsewhere, there are people who work for DEC and
are DCU members that have *started* credit unions elsewhere. I met one.
Perhaps he will run. In any event, there are lots of people financially
qualified. I don't have to be to read the statements from DCU that
don't match reality.
Besides, the day-to-day stuff is handled by professional DCU employees.
That's what they are paid to do. And Chuck, to his credit, I believe
has some good ideas and a good direction.
I feel that voting against the BoD at this meeting is going to be our
only chance at expressing our satisfaction. How else are you going to
do it? You certainly aren't going to make a difference at the regular
BoD elections. I don't thing there's *ever* been a non-incumbent
elected in the history of DCU.
Much discussion went on about whether a set of candidates should be put
forth. The consensus was that no, we only wanted to give the board a
vote of no confidence and let the normal legal process complete to
replace the board. Perhaps the old board will run again and be
re-elected.
In any event, do you have a suggestion as to how to express
dissatisfaction with the board in a more effective way? I'm all ears.
I'll drop my support of the recall today if I hear of a more effective
way to get the message across.
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| 337.18 | | MIZZOU::SHERMAN | ECADSR::Sherman DTN 223-3326 | Wed Nov 06 1991 00:40 | 43 |
| Well, I can think of some vested interests I have. They have my money,
not that it's all that much. I don't like abuse of power and tend to
become rather active against such abuse when I get opportunity. Other
than that, all I have to gain is keeping my accounts at DCU. I'm not
going to run for the Board. Not getting any money. Not getting
anything to stick on my resume. But, I am able to live with myself in
that I see something that seems to be wrong and I'm trying to do what I
can to fix it.
I'd sure like to just lay back and feel that all is right with the world.
But, when I heard that Mangone had run a scam that was so similar to
scams I've read about in S&L's I was bothered. When I learned that he
used the highly-credentialed Board to approve these loans I was
dismayed. Either those credentials didn't help, or something else was
fishy. When I got the infamous "choices" announcement sirens went off.
Boiling happened later as I saw the Board resisting the release of
auditors reports. I have an auditor's student manual at home. Folks,
this manual emphasizes that the auditor's report is intended for the
MEMBERS, not just the BOARD! And, our Board was witholding (and continues
to withold some of) this information. Further, this manual goes on to
say that the Board is responsible for making sure that this kind of
thing doesn't happen. They failed. But, they insist on staying
on. This has become an outrageous situation.
The Board has not been level and honest in communications with us.
This has been documented. They have made bad decisions. This is also
documented. All those credentials, all that experience. What good
is it if the Board continues to distance itself from shareholders and
continues to make poor decisions?
The current trend seems to be that of pointing to past failures as good
reason to keep the Board. Gee, good thing things didn't go well. If
they had, the Board wouldn't be very experienced. We'd have to replace
'em for sure. ;^|
It seems the Board is trying to isolate any disenchantment to only a few
annoying "activists". Is it true that most shareholders are apathetic
about how their interests are represented at the DCU? Well, I admit to
being asleep at the wheel for a while there. But, I'm not asleep
anymore.
Steve
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| 337.19 | | VERGA::WELLCOME | Steve Wellcome (Maynard) | Wed Nov 06 1991 08:23 | 57 |
| Response to 333.something-or-other
You and I elect the BoD; it is *our* job to evaluate them and
recommend or not recommend their removal. For better or worse,
we the members of the credit union are the evaluating agency.
We the members could hire an independent auditor to do an
evaluation, but in the absence of that the job is all ours.
Are you and I and the rest of the members biased? Darn right - it's
our money they control! I see that as only a positive bias. If the
BoD is a group with whom you feel uncomfortable trusting your money,
then that is a good and sufficient reason to vote them out. Or vote
to keep them, if that is your preference.
There are two aspects to evaluating the competence of the BoD, I
think.
One is the strictly mechanical aspect of running the credit union;
have they done a good job ensuring that our money has been invested
wisely and safely; have they run the credit union efficiently
and well.
The other is the level of feeling of "warm fuzzies" they engender;
Do they give me a feeling that I can trust them, are they responsive
to my concerns, do they make me feel that they value my membership
in the credit union, and so forth.
Based on the Mangone fiasco, it's pretty clear that they failed
pretty miserably on #1; whether *anybody* could have done better
can be debated indefinitely, but the fact remains that they got
taken for a very expensive ride, and as a result all the rest of
us did too. In addition, DCU interest rates are hardly competitive,
and haven't been for quite a while.
Based on the response of the BoD to inquiries over the past few
months, my personal feeling is that they've failed pretty miserably
on #2 as well. You may have a different opinion.
If the BoD had a stellar record of running the credit union, I
could overlook deficiencies in #2. If Mangone hadn't happened
and services were better than (or at least as good as) one could find
at almost any bank, a troglodytic BoD wouldn't be much of an issue.
If the BoD had been forthright and open in response to inquiries,
clearly understanding and responsive to concerns of members, I
might overlook the Mangone incident and say that everyone, with
all the best effort in the world, gets suckered occasionally.
The convenience and "warm fuzziness" of DCU might make up for
uncompetitive interest rates.
I see them as failing in both areas #1 and #2. They lost $18,000,000
of our money and in effect tell members it's none of our business when
we're a little curious about how that might have happened. When 2 + 2
looks as though it might be adding up to 3 and members ask for an
explanation of how we might be misinterpreting what we see, they call
people liars and accuse us of being on a "witchunt."
So what do they have to offer us?
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