Conference 7.286::dcu

    Why the concern over having contract workers eligible for DCU
    membership?

    
    Because the field of membership is for Digital employees and their
    families.  Contract workers are NOT Digital employees.  Their families
    would also be eligible to join.  I believe this is an unacceptable
    stretch of the term "Digital employee".  Contract programmers, cleaning
    staff, hired security people would be eligible to name a few.  If they
    work for Digital for 1 day they should be eligible?
    
    It is the common bond that makes DCU strong (and its losses low).  Without
    that common bond, I believe DCU would be taking a much higher risk in
    loaning money. 
    

    That sounds a bit elitist to me.  There are Credit Unions out there
    that have pretty loose definitions of "common bond" (Leominster Credit
    Union springs to mind) that seem to be doing OK.  I would think
    concerns over being a credit risk just because they weren't a permanent
    DEC employee could be addressed during the loan approval process.

    
    
    > It is the common bond that makes DCU strong...
    
    Actually,  I was thinking the other day as I was driving home
    that DCU would be better off by diversifying to a field
    of membership whose financial well being was less dependent
    on the success or failure of one struggling company.
    
      Looking at DCU's loan offerings,  the cost of unsecured
    credit (Visa/personal loans)  remains high, while secured
    loans are competitive. (Probably a wise policy given the
    flood of TFSO activity...)
    
      Also,  (my reading of)  the board minutes gives me the impression
    that DCU is having a hard time marketing loans to employees who
    are probably more debt averse than the average population.
    
      Given that the current field of membership is not likely to 
    grow,  nor change their borrowing/savings habits in the near
    term,  from the DCU's perspective  it may make sense to investigate
    expanding beyond the current field of membership...  If the
    risk pool were spread out over a more diverse pool of members,
    DCU could potentially lower unsecured credit prices somewhat,
    and perhapse raise savings rates as members from other more
    financially secure sectors borrow money to   buy cars/spend 
    on vacations etc.
    
      Whether "contract employees"  is the proper area to expand to
    is a decision I'm happy to let the board make,  but overall, 
    I feel that expanding and diversifying could ultimately be
    benificial to the current members as well...
    
    
    					-al
    
    
    
    						-al

	RE: .3

	Elitest???  Well, if it sounds "elitest" then the whole concept
	of credit unions must sound elitest to you also.  The common bond of the
	membership is a very important and distinguishing aspect of a 
	credit union.  If you loosen this common bond to the point that just
	about anybody is eligible to join, then you have a bank.  And a
	bank is not what I believe DCU members want.

	Interesting you should mention Leominster Credit Union because there
	is a branch in the town I live in.  We don't even border on Leominter
	and we're probably about 20 miles away.  I have no idea what their
	field of membership is but I would not feel that I shared a 
	common bond with other members if I were to join.  This is an area 
	where credit unions have been getting into trouble lately.  Banks
	have even sued over this type of "loose definition" since a credit
	union is afforded certain benefits that a bank is not allowed.

	As for taking the place of employment into consideration during 
	the loan process, I fear that may be construed as a form of
	discrimination.  A person's past repayment history and their ability 
	to repay a loan should be the criteria for granting loans.  Once
	a person is a member of the credit union they should be afforded the
	same treatment as all other members, irregardless of where they work.

	I encourage you and others to discuss this with other Board members
	to see where they stand on the issue and why.

    
	RE: .4

	You are correct in your assessment of membership borrowing patterns.
	But there have been signs of improvement lately that are encouraging
	and I attribute that to more aggressive marketing, better loan
	rates and improved service on DCU's part.  I have always believed
	that many DCU members (or potential members) were going elsewhere 
	for their loans.  I'm hopeful the current trend will continue because 
	loaning money to the membership is the key to profitability of the 
	credit union.  That profitability opens up doors for other
	improvements and hopefully a bonus dividend.

	But expanding the field of membership to make loans is a tricky
	proposition IMO.  It is a fact that a large majority of the loan 
	chargeoffs at DCU are from ex-employees.  I'm sure there are other
	factors involved in these chargeoffs but I also have to wonder 
	if the loss of the common bond aspect also contributes to the problem.
	I'd have to go back and examine chargeoffs for years when Digital 
	was doing well to see if the current pattern shows up then also.

	Widening the field of membership outside of Digital also means you
	must service those members.  DCU branches are on Digital property.
	Seperate branches would have to be established so those members 
	could have access.  I'm also not sure Digital, which provides 
	sponsorship and support, would welcome this move.  Why should their
	support go towards supporting DCU members who aren't Digital employees
	and never were?  That support is already stretched with the inclusion
	of relatives of Digital employees.  In these days of cancelled fishing
	derbys and Post-it shortages, I'm not sure I want to test these waters.
	We'd have much more to lose than to gain IMO.

�The common bond of the
�	membership is a very important and distinguishing aspect of a 
�	credit union.  If you loosen this common bond to the point that just
�	about anybody is eligible to join, then you have a bank.  
    
    Big deal.  The difference between a bank and a CU are pretty much
    semantic these days.  The CUs have driven banks to be more competitive
    taking away the biggest difference between the two.
    
�I have no idea what their
�	field of membership is but I would not feel that I shared a 
�	common bond with other members if I were to join.  
    
    I didn't join a CU for "bonding".  I joined LCU because I could get a
    good auto loan.  I joined DCU because it made for very convenient
    banking.
    
�	As for taking the place of employment into consideration during 
�	the loan process, I fear that may be construed as a form of
�	discrimination.  A person's past repayment history and their ability 
�	to repay a loan should be the criteria for granting loans.  
    
    I guess I didn't state that too well.  I fully agree that credit
    history and not employmer should be the criteria to approve a loan (and
    that's what I tried to say).  However, your concerns over having
    contract workers excluded from the DCU sounds like you are
    discriminating even before they've turned the application in.
    
�	I encourage you and others to discuss this with other Board members
�	to see where they stand on the issue and why.
    
    Isn't that what we're here for?  Besides, from the minutes it seems
    that a fair number of the other members agree with me.
    
�I'm sure there are other
�	factors involved in these chargeoffs but I also have to wonder 
�	if the loss of the common bond aspect also contributes to the problem.
    
    It's probabaly more a factor of the loss of a paycheck than any bond.
    
�	Widening the field of membership outside of Digital also means you
�	must service those members.  
    
    Yes, but it doesn't mean you neccessarily have to change the way you do
    business.  As long as you remain up front about the limits of your
    services and let people make their own choice, I don't see it as a
    problem.  I really don't expect the Hamilton Standard Federal Credit
    Union to open a branch in Worcester just because I moved there.  But
    then, maybe that's just me.
    
�DCU branches are on Digital property.
�	Seperate branches would have to be established so those members 
�	could have access.  
    
    Not neccessarily.  They may just have to be moved so that they don't
    require passage through work areas.  SHR and HLO did just that.  Proper
    ATM installations would also help that.  It's really not that much of
    an issue since we already have to deal with that for family members and
    ex-employees.

    I was about to ask about why there wasn't anything under VI.
    RECOMMENDATIONS, when a closer reading revealed the heading was in
    there twice.
    
    Bob

    
    RE: .7
    
    That is not a typo.  There is a Recommendation section at the end of
    the minutes that has been redacted.

Thanks for posting .5.  I hope that even those who disagre with Phil's
arguments will grant that under the prior board it was inconceivable that
anyone would receive this sort of detailed response on an issue.  In fact,
my own experience was that although several prior board members were
willing to talk with me (and in some cases actuvely sought me out), their
willingness ended the moment I disagreed with them.  Arguments on issues
can (and sometimes have) become vehement in this notes file, but I think 
that this is a big improvement over no communication. 


I'd like to add a few words on the value of the "common bond".  The 
emotional value of the bond varies for different people -- some treat
the DCU like a bank, while others take a strong identification in being 
Digital employees and in being members of the Digital Employee's FCU.

But all emotions aside, I think there's a strong economic value in the
common bond.  Digital employees as a group have certain characteristics
that *can* allow the DCU to treat its members differently than a bank
treats its customers.  In fact, many people have complained in this
file that the common bond OUGHT to make the DCU treat them differently
than banks, but the DCU in the past didn't.  Most of these complaints
revolve around the notion of loan risk.  Chuck Cockburn has stated that loan
default rates for DCU members are far below that experienced by the typical
bank, and even below most credit unions.  So, the DCU can afford to make
loans that would be considered too risky by a general membership CU or
by a bank, because given our membership pool, it isn't as risky for us.


No doubt the terrible "E" word will be cited again (ELITIST!! ELITIST!!)
about this statistical fact.  It isn't clear to me why it should be
considered politically incorrect to say that loaning money is safer to
a group of people with more stable employment and higher salaries than
the regional average.  And yes, even with TFSO, our jobs are at present
more stable than the average.  It's a harsh world out there.  I'm not
clear this would be as true with an expanded field of membership.

But if this is elitism, then let's look at other employee benefits.  How
about health insurance?  Contract workers don't get covered, and our group
rates are far lower than contract workers could get on their own.  Is this
sufficient grounds for saying that contract workers should be included?
Is it elitism on the part of the insurance companies and HMO's to charge
Digital employees less as a group than they charge individuals or some
other groups?    Or is it just recognition that Digital employees (as a
group) are healthier than average?


Like another noter, I'm glad that it is the Board, and not me, that has
to decide whether to expand the field of membership.  However, I don't
think the arguments that Phil makes in .5 should be rejected out of hand.
And in any case, I think we all should appreciate that at least one
member of the board is willing to lay out his views and reasons for thim
in this very public (and sometimes very skeptical) environment.  Agree
or disagree, at least it's communication, and that's a BIG improvement.
Under the old board, who would even have known that such an issue was
under discussion?

	Enjoy,
	Larry

    I guess I am a paradox.  I am a politically correct old BoD supporter.
    
�No doubt the terrible "E" word will be cited again (ELITIST!! ELITIST!!)
�about this statistical fact.  
    
    Sorry to cast doubts, but that won't happen.  I used the "E" word
    because it seemed to me that conclusions were being drawn without
    facts.  Decisions were made that certain people were bad credit risks
    before their histories could even be looked at.  I suggested that these
    concerns would be better addressed during the loan application process
    (first to see if there really are concerns).  Using this type of logic,
    those folks who have been TFSOed should no longer be members since the
    common bond no longer exists.

    
    
      re -.1
    
    > I guess I'm a paradox - I'm a politically correct old BOD supporter...
    
      I had noticed your ongoing support for the old BOD/lack of support
    for the new folks.   Out of curiosity, do you mind listing your 
    reasons why you support the old BOD and apparantly dislike the
    real_choices "movement" ?  (This isn't meant as a flame,
    I'm just genuinely curious...)
    
    
    
    						-al

�      I had noticed your ongoing support for the old BOD/lack of support
�    for the new folks.   
    
    You're noticing something that isn't there.

    
    Re: .9
    
    I quite agree.
    
    Re: .10
    
    > Decisions were made that certain people were bad credit risks
    > before their histories could even be looked at.  
    
    I prefer to see it as the data to the present shows that the current
    formula for membership and for providing loans, etc. continues to
    leave the DCU with a much lower than average number of bad loans.
    Using the data, why would anyone want to tamper with a clearly
    successful formula.  In fact the *ONLY* serious failing, the infamous
    Mangone affair, was when the BoD permitted a significant departure 
    from the tried and true that the had sustained the DCU since the
    beginning.
    
    Steve
    
    
    

re: .13

>    I prefer to see it as the data to the present shows that the current
>    formula for membership and for providing loans, etc. continues to
>    leave the DCU with a much lower than average number of bad loans.
>    Using the data, why would anyone want to tamper with a clearly
>    successful formula.  In fact the *ONLY* serious failing, the infamous

I hope I'm not misunderstanding you here, but this conference is full of stories
of people whom DCU had turned down for loans, going to other financial
institutions and getting immediate approval on loans.  The same goes for
credit cards.  As such, I'd say their 'successful formula' cost them a lot
in lost customers.

Bob

    
    Re: .14
    
    > As such, I'd say their 'successful formula' cost them a lot in
    > lost customers.

    Perhaps in some cases you are correct because they didn't take
    enough into consideration, but I'd also like to see the default
    rate from those other financial institutions and whether they
    are still in business.
    
    Steve
    
    

>              <<< Note 677.12 by PATE::MACNEAL "ruck `n' roll" >>>
>
>�      I had noticed your ongoing support for the old BOD/lack of support
>�    for the new folks.   
>    
>    You're noticing something that isn't there.

	Now, THAT is a paradox!

    
    Another very important factor is that IMO, DCU doesn't NEED to expand
    its field of membership.  Many months back I asked DCU management to
    analyze market penetration, ie. out of the total possible membership
    DCU could have, how many are DCU members.  It was estimated that DCU
    currently has only 50% of the potential membership.  And of that 50%, a
    large number do not use DCU as their primary institution.  IMO we need
    to focus our efforts on getting our field of membership on board and not
    expanding the field of membership.  To this end I have suggested a
    membership drive as well as target marketing to members that don't use
    the credit union as their primary institution.  Metpay sent something 
    out to DEC employees in interoffice mail trying to get business.  
    Something like this might bring more people into the credit union.

I have had some pleasant talks with DCU personal.  A couple things to mention.
They have been friendly and helpful so far.  My goal is to help all of
us understand the cost per member.  From that we can then attain the
answer to many of our questions.

There is some change in certain areas.  Some we know of are mortgages of
various flavors. 

One many of us will find interesting is the Visa rates are dropping to
11.9%/13.9% (tiered rate) on mid August.

We will also be getting a updated Truth in Lending disclosure brochure
in the fall.  This outlines federal laws and how various orgs must use
them.

	- mark

    
    Re .7, .8
    
    Well, I guess we know now what the "recommendations" were...