Conference 7.286::dcu

    
    I sent Lisa the attached questions. I'm having difficulty understanding
    how a member can get their savings account to drop below $5.
    
    Dave
    
From:	SMAUG::GARROD "Candidate for the DCU Board of Directors  25-Feb-1994 1033 -0500" 25-FEB-1994 10:43:11.47
To:	LEDS::ROSS
CC:	GARROD
Subj:	Question regarding the DCU Board Memo you posted

Lisa,

I just read the DCU Board memo that you posted in the DCU notesfile. I had
some questions on it.

Re:

>        Accounts with less than $5.00/Clean-Up          8,253
>        
>        This category represents members who had inactive savings 
>        accounts with less than $5.00 and had no other accounts, loans 
>        or services.  In order to ensure that members wanted their 
>        accounts closed, we sent a letter encouraging reinstatement of 
>        membership.  Members authorized closing the majority of these 
>        accounts; however, credit union procedure in the past did not 
>        result in the account being removed from our database.  This 
>        process was corrected in September 1993.
        
1, What are the reasons that these accounts fell below $5.00. When I try and use
   the touchtone system to transfer money from my primary savings account
   it will not let me drop below the $5 limit. The same goes if I try and use
   an ATM to transfer money out of it. Since you can't write cheques against
   the account either how is it possible for a member to drop below the
   mandatory $5 in the account. Please could you list the means by which these
   accounts dropped below $5. Since it seems to be it is impossible for a
   member to drop them below $5.

2, The above seems to imply that members authorized the closing of most of these
   accounts in SEPTEMBER. But then you say "credit union procedure in the
   past did not result in the account being removed from our database". Are you
   saying that members requested closing these accounts EARLIER but due to
   lack of procedures they weren't removed from the database.

Thanks for any answers you can give to these questions.

Dave Garrod

This memo helps somewhat, particularly in regards to the membership 
numbers.  Thank you.

With respect to the dividend discussion, I can accept a strategy that 
redistributes earnings via better rates.  However it's most unclear when
such a strategy will be implemented.  The current rates are merely
"competitive", so I can't believe anyone thinks we are already implementing
it.  

It's also very much in question what the priority of implementing 
this strategy is, versus continued growth in the capital ratio.  
In the absence of information to the contrary, and in light of the current
savings and loan rates, many of us sense it has a very low priority.

I strongly disagree that these apparent priorities are the way that
the CU should be operating, and I intend to express my disagreement
when I vote in the upcoming election.  To those Board members 
(particularly those up for reelection) who voted against a dividend:
I urge you to clarify your position.  

To the Board as a whole, I think it is appropriate to undertake and gain 
consensus on the long term strategy and implementation timetable for
returning earnings to the membership, or to publicize this information if
the discussions have already taken place.  At this point, all know for sure 
from the board memo is why you don't want to do this now.

Brian Keane

        
>    I sent Lisa the attached questions. I'm having difficulty understanding
>    how a member can get their savings account to drop below $5.

    The easiest way is to write a check that requires moving money from
    savings to cover it and never deposit any thing. I would assume that
    one could use an ATM to withdraw the money as well. I can easily
    see someone making a withdrawal and forgetting about the ATM fee so
    that that causes the balance to drop below $5. Does the ATM software
    figure in the fee when checking how much money it can give you?

    			Alfred

    
    
    re: The memo..
    
    Thank you...  But isn't it strange that it takes one person to get the
    ball rolling before the DCU wants to "communicate" with its membership.
    The DCU will claim misinformation, but in reality it could be considered
    "miscommunication" by the DCU to it's members.
    
    As a suggestion, perhaps these "monthly" audits should be either placed
    here or in the quarterly updated sent to membership... I don't think
    there is any one of the BOD members (candidates at the time) who said
    that they did not want to communicate.  Unfortunately, there only
    appears to be a couple who do communicate... strange isn't it..  Just
    like real politicians, use the "buzzword" du jour to get elected.
    
    Perhaps Chuck should draft a memo stating why he feels the need for 
    "Relationships" even though the credit union is making record profits.
    Maybe using the hot topics of discussion in this notesfile would be 
    an advantage to the BOD and CU Mgmt as a way to "COMMUNICATE".  Of 
    course given past history, do we really expect this to happen?
    
    
    John
    

Lisa,

        
>        No Fair Way of Distribution - Any distribution of excess funds 
>        in the form of a bonus dividend for regular shares is unfair 
>        to the borrowers of the credit union.  

I don't understand the logic behind this statement. I thought every borrower
was a shareholder, by default. Therefore, all borrowers will benefit.

>       Also, a regular share bonus dividend would not benefit members who 
>       hold most of their funds in CDs, IRAs or Money Market Accounts.  

Please see above, or please correct me. It may not allow them the *maximum 
feasible benefit*, but they will benefit. Also, I haven't seen any objection
in this notesfile to raising interest rates on the above mentioned accounts in
addition to share accounts.        

>       In today's competitive environment, the vast majority of credit unions 
>       find it better to offer the best loan and savings rates they can 
>       afford throughout the year rather than declare a bonus dividend at 
>       year end.  In this way, members also benefit by having the dividend 
>       funds earlier.
        
I haven't seen any objection to this approach in this notesfile, either. What
we'd all like to know is "what is the timetable". In my opinion, the current
rates are not competitive at all. There's no reason why the DCU cannot be 
best in class. If there are plans underway to make the rates more competitive,
then please share what you can with us before the election so that us DCU
members who vote can make an informed decision.

Chris
 

        
>        Since this information was incomplete and out of 
>        context, the DCU Board of Directors is providing the following 
>        memo to answer your questions and concerns regarding these 
>        issues.

    Well, the back pedaling begins.  First it was "misinformation" and
    "confidential information" in order to justify reactivation of DCU
    management's access to this conference.  Then the wording of the motion
    was (attempted to be) changed (after the fact) to "possible posting of
    misinformation and potentially confidential information".  Now it is
    "incomplete and out of context".

    The information posted was NOT out of context NOR incomplete.  A DCU
    member asked for membership counts and stated she couldn't get an
    answer.  I provided that answer with EXACT FIGURES.  When the
    information was presented to us in September, there was no detail IN
    WRITING that could be posted.  Low and behold, *4* months later that
    information appears.  Before I posted the exact membership count and
    their changes, I gave the explanation I was given that accounted for
    the large drop.  Since then, I have been told something different.  In
    order to resolve this conflict, I have asked DCU management for
    detailed information on these ~7400 DCU members that were "cleaned up". 
    It has been 3 weeks and that information has NOT been forthcoming. 
    Instead what I got was a question concerning my "business reason for
    wanting this information".  I very politely explained my reasons and
    still haven't gotten the information.

>        As explained at the Board meeting, when this information was 
>        presented, there were three primary reasons that explain the 
>        large drop in membership during the last few months of 1993.  

    There were POTENTIAL reasons and no hard facts given.  It wasn't until
    4 month later that this information was given, due ENTIRELY to the
    discussion in this conference IMO.

>        Accounts with less than $5.00/Clean-Up          8,253
>        
>        This category represents members who had inactive savings 
>        accounts with less than $5.00 and had no other accounts, loans 
>        or services.  In order to ensure that members wanted their 
>        accounts closed, we sent a letter encouraging reinstatement of 
>        membership.  Members authorized closing the majority of these 
>        accounts; however, credit union procedure in the past did not 
>        result in the account being removed from our database.  This 
>        process was corrected in September 1993.

    Again, how does a member fall BELOW their $5 membership share?  They
    should be accruing interest on this amount and it should be INCREASING. 
    I thought that last $5 was basically untouchable until account closing.
    To be below $5 would be inviolation of our Bylaws and this should NOT
    have been allowed to happen, let alone continue.
    
    Were inactivity fees applied against any of these members?

    And by "members authorized closing" do you mean they didn't do
    anything because closing out the membership was the DEFAULT action. 
    Were all funds returned to the member?

    And for the life of me, I still don't understand how all these inactive
    accounts could have been allowed to a linger in our database after
    "closing".  When was this problem discovered?  The Board never heard of
    it before this time.  This problem means all the data on "small
    accounts costing DCU money" created BOGUS data that was used to
    justify the current "relationship banking" scheme.  If my
    recommendations of trying to determine the cause of all these
    inactive members had been followed, this would have been discovered and
    new, MEANINGFUL INFORMATION could have been generated to justify, or
    NOT justify "relationship banking".  I must say, as a Director, this
    whole situation raises some very serious questions in my mind.

        
>        	o  Help the institution continue operating during low 
>                   earnings periods.

    We are experiencing RECORD PROFITS.  Excluding fraud, we have ALWAYS
    been very profitable.

>        	o  Act as a cushion for absorbing unexpected losses.

    Now that proper controls are in place and no more "investments in Cape
    Cod real estate" will occur, we have over $20 million for the
    "unexpected".

>        	o  Provide the funding for new services, expansion, 
>                   etc.

    We are shutting down branches.  Again, $20 million is there for
    whatever is required.

>        	o  Meet regulatory guidelines.

    Please quote these "regulatory guidelines".  The NCUA can NOT tell DCU
    it must have a specific capital ratio.  We are no where near the danger
    point as far as equity is concerned, which is the point where they DO
    get involved.  The above statement is VERY misleading because somebody
    might think that our regulators have set specific number targets.

>        	o  Provide no cost earnings base.

    BINGO!!  Membership money, that DCU pays NO interest on, that it then
    loans back to the membership.  Can you say HIGH PROFIT?
        
>        Overall, credit unions are the best capitalized of all 
>        financial institutions with an average ratio of 8.5%.  The 
>        need for capital varies among different credit unions due to 
>        competitive economic and business factors that impact the 
>        execution of business strategies.  At the 1993 Planning 
>        Conference, your Board set an eventual goal to raise the 
>        credit union's capital ratio to at least the industry average.

    Well, there you have it, the explanation for the ever increasing
    capital ratio target.  Our default rates are typically
    FAR BELOW INDUSTRY AVERAGE.  This mitigates the need equity.  Where
    does that fit into the equation?

    We seem to compare ourselves to the "competition", which is banks, when
    it comes to product pricing, yet switch to credit unions when it comes
    to equity.  It has been pointed out that at many banks, our current
    capital ratio would be considered outstanding.
        
>        Excess Capital Does Not Exist - It is important to distinguish 
>        between annual profits and capital.  A credit union can have 
>        an outstanding year from a profit standpoint, but still needs 
>        to build capital.  This was the case for DCU in 1993.  DCU's 
>        capital ratio has improved substantially from a low 3.4% as of 
>        December 31, 1991, to 6.5% as of year end 1993.  The current 
>        Board of Directors has been commended for the credit union's 
>        progress in this area by our independent auditors and 
>        examiners, who agree with the majority of the Board that our 
>        capital needs to continue to grow.

    And the two Directors that voted FOR bonus dividends believe capital
    should grow, but you'd never know it from the above statement.  What
    was proposed was a SLOWER equity growth while re-investing some yearly
    profits IN THE MEMBERSHIP.

    At this point in time, ALL annual profits are being used to build up
    equity (denominator of capital ratio equation).  I have asked several
    times and have yet to get an answer, "When is enough, enough?".  One
    time I was given an answer that one credit union had a 12% capital
    ratio and they STILL needed to raise it!  I have to wonder if
    there ever will be a time for bonus dividends given this example.
        
>        No Fair Way of Distribution - Any distribution of excess funds 
>        in the form of a bonus dividend for regular shares is unfair 
>        to the borrowers of the credit union.  Also, a regular share 
>        bonus dividend would not benefit members who hold most of 
>        their funds in CDs, IRAs or Money Market Accounts.  In today's 
>        competitive environment, the vast majority of credit unions 
>        find it better to offer the best loan and savings rates they 
>        can afford throughout the year rather than declare a bonus 
>        dividend at year end.  In this way, members also benefit by 
>        having the dividend funds earlier.

    I cannot believe this statement has been put in print.  You mean to tell me
    that DCU can find a fair way to FEE THE MEMBERSHIP but can't find a
    fair why to return profits to them?  If there is no fair way now, THERE
    WILL NEVER BE A FAIR WAY.

    As for offering the best savings and loan rates throughout the year, I
    AGREE!  But we don't.  We set our rates based upon our competitors
    (banks), ie. the market sets the rates.  If we wanted to offer better
    rates on savings, we could have last year because we were below budgeted
    amounts (remember that positive dividend variance?).  But that clearly
    did NOT happen.  

>        Capital Improves the Competitive Position of a Credit Union - 
>        If DCU declared a bonus dividend, it would reduce our 
>        competitive position.  Capital represents funds that can be 
>        lent out to the members or invested but does not require a 
>        dividend to be paid on those funds.  As a result, a 
>        well-capitalized credit union can be much more competitive in 
>        providing services, setting loan and savings rates and 
>        offering new investment vehicles.  Again, borrowers and savers 
>        both benefit.

    I could argue that granting a bonus dividend encourages more people to
    participate in the credit union and solidifies membership loyalty,
    something that NEEDS work.  The current approach is the classic "give
    me your money and let me spend it because I know what's best for you"
    approach.
        
>        The Board had a healthy debate on this topic, as you will see 
>        when the minutes are made available to the membership.  The 
>        majority of the Board believes that DCU needs to continue to 
>        offer competitive loan and savings rates and accumulate 
>        capital.

    We sure did and the debate will continue because this is an issue of
    fundamental importance.  Are we a BANK or are we a CREDIT UNION?  And
    what does the membership want DCU to be?

    I would like to conclude by stating that, to the best of my knowledge,
    the above "Board Memo" was written by DCU management and approved by a
    majority of the Board present at our last meeting.  No where in this
    "Board Memo" is DCU's management position stated.  It was very
    vocally expressed during the debate mentioned above.  The position was
    AGAINST bonus dividends.  I would also like to point out that the
    Directors in FAVOR of bonus dividends requested that BOTH sides of the
    story be told in the above "Board Memo", but we were simply out voted,
    and thus our position and reasons SILENCED.  I guess it is OK to be
    "incomplete" as long as it is approved by the majority of the Board.
    Unbelieveable.

Re:  .6

I think many of your points are well made, Phil.

I found it hard to believe that Phil had knowledge of
the vast number of accounts closed in September because 
of dropping below the minimum (after claiming many times
that he *didn't* know because data was not provided) and 
then reading this memo which implies that Phil intentionally
mislead us.

I find this memo to be much more misleading than anything
Phil has shared with us.

However, I do thank the Board for communicating with us as
I think it is very healthy to hear the differing views so as
to be in a position to judge for ourselves.

Collis

    Much like when Phil posted the numbers for the Mangone loan, he allowed
    speculation to run rampant around the membership drop.
    
    When I even suggested that something besides the relationship banking
    announcement may have caused the drop I was (electronically speaking)
    between about the head and shoulders.

  >Any distribution of excess funds in the form of a bonus dividend 
  >for regular shares is unfair to the borrowers of the credit union.

Incredible.

Finally, DCU BOD cares about fairness.  It seems that if DCU wants
more money and fairness gets in the way, it is the first thing tossed
out the window.  (Is Relationship Banking fair?  You've got to be
kidding me.)  But if members/owners ask for a return to the
historical pattern of distributing dividends and "fairness" can
be used to avoid this, then it is.

Incredible.

Collis

    >Much like when Phil posted the numbers for the Mangone loan, he allowed
    >speculation to run rampant around the membership drop.
 
Go ahead, Keith.  Blame Phil for the lack of information that
WAS NOT provided.

Clearly, the solution is to provide even less information so that
are speculations are even wilder - right?

Why didn't you get this information during the last 4 months,
Keith?  Phil suggested this to you many, many times.  Isn't this
your fault?

Let's be serious for a minute.  If DCU management doesn't provide
the data - even when asked - should we shoot the messenger who
doesn't have all the facts?  Or should we thank him we what few
facts we do have?  Your call.

Collis

How could anyone believe that the DCU would leave this many inactive 
account in their database; it was utter stupidity and mismangement for the 
DCU to still have these in their datbase.  I find it wholly suspect that 
they conveniently decided to remove them at the same time as the 
Relationship notification.  I'd ask Chuck but I know I wouldn't get a 
straight answer much less have him even speak to this DCU Owner.

Jilly bring_on_the_elections

    Not so incredible, Collis.  The rationale behind relationship banking
    (at least in the minds of its proponents) is that it is more fair.  I
    guess it all depends on how you define a cooperative.  Is it an
    organization where people pitch in the best the can so everybody
    benefits (basically the rich subsidize the poor), or is it a place
    where everyone pitches in the same, or is it a place where everyone
    pitches in at least some minimum amount?

    
    Allow me to point out that the Board has been given NO numbers that
    indicate how many members have left DCU due to the implementation of
    "relationship banking".  The summary chart given to us contains NO such
    information.  Is that we don't the info, that we don't care about the
    info, or that we don't believe any members are leaving?
    

    One thing the DCU should do is ask Why? whenever a Customer/Owner
    leaves....at least some simple comment card.  Have the teller or
    whoever is closer the account ask the future ex-member to fill it out.
    
    Some people will - some won't ....its too late for this latest fiasco
    but I think it would be at least a tool to help track why customers
    leave.
    
    Jt

    
    Yup, bonus dividends just aren't fair...  Please read 764.0 to see just
    how unfair they can be.
    

Re .7

>However, I do thank the Board for communicating with us as

You're kidding, right?  Having Lisa post something on behalf of the board
and then her and most other board members not participate in the dialog is
communicating?  ok, in all fairness, this hasn't been posted that long, and
so maybe no one other than Phil has had a chance to respond - but the track
record doesn't give me much hope.

A board is long, hard and narrow.  It is made of wood.

--Scott

    
    Re: 4.9
    
    Since it has been no secret that Chuck Cockburn does not the
    DCU to delcare dividends, 4.9 is just a way to justify giving
    Chuck what he wants.
    
    Send those ballots.  I can't wait to cast my votes.
    
    Steve

I find it amazing that Phil, a DIRECTOR of DCU, was asked for a BUSINESS
REASON for wanting information from DCU!!!!!!!!!!!!!!!!!!!!

This is absolute arrogance on the part of DCU management!

When the Directors have to pay the game of the IPP something is VERY WRONG!

Stuart

Hmm, all this money and no fair way to distribute it.

NOW, I have a proposal to bring back the OLD DCU board, and not Mangone.
They figured out a way the was pretty fair.

I remember receiving a letter in August in the early 80's (2-3?) when they
declared they had all this money, and therefore were going to

	1) REDUCE interest rates on ALL loans by 1/4% until year end
AND
	2) INCREASE interest rates on ALL accounts by 1/4% until year end.

Gee, this seem to get to everyone whether they are borrowing or saving,
doesn't it ?

(Perhaps there would be a problem with mortgages, since they are sold, but
 there might be a germ of an idea how to handle that also).

Oh, and also at the same time, we were encouraged to (ab)use the credit
union and open all the accounts we wanted for:

	Club type savings,
	Share draft,
	Mini savings accounts for the kids,
	Accounts with restricted withdrawals, and higher interest
		(great for once a month payment sprees for Mortgages, etc).

	At one time I was an account junkie with 12 accounts and >$3000
	in savings in all these little pockets.  My average across a year
	tended to be around $1500 or so (property tax account was one of
	them).

Now we have restrictions, fees, and all this other good stuff, to make
the Credit UNION more fair to it's members.

(Set mode facetious on)

	Would that DCU should drop interest rates by 1/4%, we'd get
	  more loans and have to figure out what capital ratio we
	  needed to accumulate to make this money non distributable!

	Would that DCU should RAISE the rates on accounts by 1/4%, more
	  people would deposit more money and thoroughly mess up the
	  capital ratio, but then you'd need not distribute the profits
	  because you'd never reach the capital ration, because more
	  people would deposit money which would mess ...


	Would that DCU should do both and drive CC out of his gourd,
	  and raise deposits, netting more money to loan, netting more
	  profits, netting better service, netting more depositors,
	  netting more deposits, netting more money to loan ...

		BOY WHAT AN AWFUL THING FOR A CREDIT UNION TO DO!!!!!

(Set mode facetious off)

Election here I come, it's time for a MAJOR change in direction.

\Bill

Re .19:

(Continue mode Facetious)

	Or shall we all just bow to the Emperor Cockburn ?

�    Allow me to point out that the Board has been given NO numbers that
�    indicate how many members have left DCU due to the implementation of
�    "relationship banking".  The summary chart given to us contains NO such
�    information.  
    
    Do you mean that more members have left than are indicated on the
    summary chart?

�    One thing the DCU should do is ask Why? whenever a Customer/Owner
�    leaves....at least some simple comment card.  Have the teller or
�    whoever is closer the account ask the future ex-member to fill it out.
    
    The one I filled out to close my U-Name-It account a couple of months
    ago had a space to fill in to explain why the account was being closed.

�I find it amazing that Phil, a DIRECTOR of DCU, was asked for a BUSINESS
�REASON for wanting information from DCU!!!!!!!!!!!!!!!!!!!!
    
    Why?  Do you think that a Board member should be treated any
    differently than any other member?

    Did you ask that facetiously Keith, with your tongue 10 miles out
    into your cheek, or were you serious ?????
    
    For goodness sake, a Director is an elected officer of the institution,
    and that of itself gives them a business reason to ask for virtually
    any information of the institution!
    
    Stuart
    
    
    

    
    >Do you mean that more members have left than are indicated on the
    >summary chart?
    
    No.  What I am saying is that the summary doesn't say ANY members left
    because of the fees.  Don't you want to know THAT fact?  Are we to
    believe that NONE have left because of the fees?
    
    BTW, we are now down to 73,567 members.  January indicates 219 new
    members, 705 members left.  I have not been made aware of any special
    circumstances, such "cleanups" , etc.  What on earth could be causing 3
    members to leave for every 1 that joins?
    

    Lisa,
    
    Love the timing of your memo. I guess you want to get reelected. Where
    were you till now?? Stop playing this game. Probably we should get rid
    of whole Digital Credit Union Management, specially Chuck. You don't
    get my vote.
    
    Bharat S. Shah

Re:  Communication

A board memo is communication.  Admittedly, one memo isn't a lot
of communication in a notesfile, but it is something.

Lisa has been very willing to communicate to DCU members outside
of notes, from what I have heard.  She has been relatively unwilling
to write much of anything in here; but that shouldn't be taken to
mean that she is unwilling to communicate, just that she is unwilling
to communicate in this notesfile.

Now, as an active member of this notesfile, I think that this
position on the part of a director (any of the DCU directors)
is a (big) mistake.  However, each of them makes their choices
and then we make our choices.

Collis

    re:	>   accounts with less then $5.00/clean- up
    
    Since there was no separat catagory for member-closed accounts, is it
    possible that accounts closed by members (i.e. falling to $0.00) and/or
    'cleaned-up' becuase they were closed, are counted in this catagory.
    
    
    Incomplete information aloows me to draw my own conclusion.
    
    Mark

    I'm confused.  According to information Phil was given and which he
    referred to in 739.60 as reasons for 1993 accouint closings:

> 	Closed Memberships:
>
>	o  Inactive < $5.00 and no other accounts		7,465
>	o  Branch Closure					  483
>	o  Escheat (inactive for 3 years)			  662
>	o  Loss Policy - Member Closed				   50
>	o  Checking Account Abuse - Member Closed		   93
>	o  Dormant						  519
>	o  Prior Year Clean Up					  788
>	o  Layoffs & Other					3,241
>
>	Total						       13,301
    
    I closed my account in 1993 due to the Relationship mailing.  I had
    $5 and a DCU Visa that I hadn't used in a year.  Where am I tallied?
    In the large 7,465 pool?  
    
    I think its important to understand why I was in that state.  Around
    the time of the Mangone I took out all my savings (substantial).  
    I opted to keep $5 in for voting rights.  I cared to see the DCU turned
    around.  I attended the Special Meeting.  I was very happy to see 
    the Real Choice successes.  But it was going to be a hassle to trudge
    all my accounts back, so I decided to wait a year to see how the new 
    President and policies worked out.  
    
    After the Relationship memo, I quit for real.
    
    Were all us "hoping but skeptical" members who thought the Relationship
    memo was the last straw tallied there?  If so, being called "inactive"
    is a euphemism at best.  
    
    <opinon alert>
    
    * DCU *HAD* loads of business from me (relationship and more), but lost   *
    * it due to Mangone/fees.  It seems like when the DCU decided to try and  *
    * re-establish relationships, they opted for the stick over the carrot.   *
    * Did DCU care that I was a relationship member of my own free will at    *
    * one time?  Apparantly not.  Phil and others cared, but they could not   *
    * seem to convice the DCU that "winning" me back would have gotten them a *
    * relationship member, but legislating my behavior lost me for good.  Too *
    * bad for all.                                                            *
    
    Now, in 4.9, Lisa states:
    
>        Accounts with less than $5.00/Clean-Up          8,253
    
    Was I tallied here?  If so, "Clean-Up" is a euphemism at best.
    
    If I wasn't tallied in either of those categories, where then?
    
    - Sean
    

    RE: .29 Assuming that you did have $5 in your account I would assume
    you would be included in the "Layoffs and Other" group. I know of no
    reason to assume otherwise given what you've said.
    
    			Alfred

After reading this "board memo," the following concerns come to mind:

1.  A large number of accounts were closed due to account valuations
    of less than $5.00/share.

2.  In reading DCU's federal charter, the following quote seems
    relevant:

    "The par value of the shares of this credit union will be $5.00."

What I really want know is what percentage of the accounts that were
closed in the less-than-five-dollar "cleanup" had balances that were
reduced by the owner below that amount compared to the percentage of
inactive accounts that were subjected to inactive account fees until
their balances fell below $5.00.

A member should be entitled to own at least one $5.00 share without
regard for account activity with appropriate respect to the escheat
laws imposed by the Commonwealth.  In fact, I recall reading something
in the Relationship Banking information sent to membership stating
that a member was entitled to retain a $5.00 share without fee.

What is DCU's policy regarding feeing inactive accounts?  If the balance 
of an account is drawn below $5.00 soley by DCU-imposed fees of any sort, 
is the member then terminated?  If so, how does this activity not 
interfere with the right of an individual within the field of membership
to become a member and retain a $5.00 share without fee?

I understand fully the escheat laws for inactive bank accounts, as I
once allowed an account to fall into escheat.  Further, I understand
closing a member account should the user intentionally draw down the
balance under $5.00.  On the face of it, though, the number of accounts
closed in the $5.00 "cleanup" seems very high to me.

Chris

    
    Lisa,
    
    According to information posted elsewhere in this conference, of the
    13.301 accounts closed in 1993, 3.241 were due to "Layoffs & Other".
    How many of these were specifically due to "Layoffs", and what reasons
    are included in "Other"? How many accounts were closed due to the
    institution of "Fees" or "Relationship Banking"?
    
    Also, please read the article in note 764, talk to the people at LAFCU,
    and then let us know whether you still believe it unwise to declare
    dividend bunuses and/or interest refunds, and whether you still hold
    that there is "No Fair Way of Distribution".
    

    NOW we get a board memo!
    
    

    re .8:
    
    Mea culpa, Keith.  I was one of the ones who replied to you that there had
    been *NO* plausible alternative reason posted for why so many members
    left in September.  I wasn't aware that that counted as beating you
    about the head and shoulders -- my intent was simply to disagree.  I
    guess it goes to show that emotion is hard to read in printed text.
    
    However, I still feel that I was right.  I don't consider "well, we
    closed the accounts but didn't take them off the membership list" to be
    a plausible reason why so many accounts closed in September.  Yes, I
    accept that it's true, I just don't find it plausible.  And as Phil said,
    it invalidates *all* of the so-called facts about there being lots of
    abusive members with low balance share accounts.
    
    Anyway, Keith, shall we start over?  I'll agree there was an explanation 
    (other than annoyance at fees) for so many accounts closing in September, 
    if you'll agree that management totally screwed up what little data it 
    hsa said that it analyzed regarding abusive low balance members who 
    require relationship banking to be brought into line.
    
    In other words, do you agree that data from management and from people 
    questioning management be treated with equal scepticism?  That *both*
    sides should be required to offer data for our consideration  before 
    we believe them?
    
    		Enjoy,
    		Larry

    I just got a call from Katie Barber at the credit union. Lisa passed my
    questions in .1 on to her. I got a very complete answer from Katie
    that she said she was quite happy with me summarizing here.
    
    I will do so when I get a few spare minutes. I wrote down the key
    points she gave me.
    
    Dave

�    In other words, do you agree that data from management and from people 
�    questioning management be treated with equal scepticism?  That *both*
�    sides should be required to offer data for our consideration  before 
�    we believe them?
    
    I believe that is what I've been saying all along.

    re .-1:  Hmm, well I must just have forgotten the note in which you
    insisted that management provide the facts behind their claims of
    abusive accounts and other claimed justifications for a fee system.
    All I can recall is your notes in which you told people questioning
    management that they had to provide facts.  That doesn't seem like
    "equal scepticism" to me.
    
    But you failed to respond to the important part.  Does accepting this
    justification for the huge number of account closings in September
    mean that you accept that there really wasn't a problem with large
    numbers of <$5 "abusers" of the credit union?  Again I may be
    misremembering, but I seem to recall that as one of your positions.
    
    	Inquiring minds want to know,
    	Larry

�    re .-1:  Hmm, well I must just have forgotten the note in which you
�    insisted that management provide the facts behind their claims of
�    abusive accounts and other claimed justifications for a fee system.
�    All I can recall is your notes in which you told people questioning
�    management that they had to provide facts.  That doesn't seem like
�    "equal scepticism" to me.
    
    What I was saying was that if you want management to change their minds
    about the current structure, you will have to deluge them with real
    facts and figures.  Enough to show that whatever they have used to
    substantiate their position was incorrect.  They apparently believe
    that they have all the facts and figures to implement this financial
    model.  I haven't accepted that this is a good model.  I have accepted
    that it has been implemented.  There are two ways to reverse the
    implementation -- 1 is to "vote the bums out", the other is to convince
    management they have a flawed model.  There is also a third alternative
    -- work within the system to ensure that this model gives the
    membership best in class rates and services and make sure the model is
    not too restrictive.
    
�    But you failed to respond to the important part.  Does accepting this
�    justification for the huge number of account closings in September
�    mean that you accept that there really wasn't a problem with large
�    numbers of <$5 "abusers" of the credit union?  
    
    I don't understand the question.  I don't recall ever saying that there
    was or wasn't a problem with "abusers".  I do recall that it was an
    argument in favor of relationship banking.  There did appear to be a
    lot of low balance members of the credit union.  It does cost money to
    carry these accounts (some have called this the cost of doing
    business).  Those accounts have been cleaned up.  Now that they have
    been cleaned up, I certainly think we need an answer to the question of
    is this business model called relationship banking still neccessary?.

  >Now that they have been cleaned up, I certainly think we need an 
  >answer to the question of is this business model called 
  >relationship banking still neccessary?.

I think there is widespread agreement here.

Collis