Conference 7.286::dcu

A couple of issues might merit discussion at your meeting:

	1. In the past, bonuses were paid to DCU employees at year end.
Has this practice continued, what sums were paid to the senior staff
last year, why should this practice continue?

	2. So far nothing has been said about the loan officer's 
lack of involvement in the participation loans, It seems amazing
that high dollar loans were transacted without the loan officer's
involvement. A reasonable person might conclude the loan officer's job
was not performed properly either through default or demur.

>	1. In the past, bonuses were paid to DCU employees at year end.
>Has this practice continued, what sums were paid to the senior staff
>last year, why should this practice continue?

    What?  I asked if there are bonuses for senior management and have
    been told there was very little spent on this ($10K?).  I never dreamed
    that ALL DCU employees may be getting bonuses.  Do you know for
    a fact that all DCU employees get bonuses?  How much and what are they
    based on?
    
>	2. So far nothing has been said about the loan officer's 
>lack of involvement in the participation loans, It seems amazing
>that high dollar loans were transacted without the loan officer's
>involvement. A reasonable person might conclude the loan officer's job
>was not performed properly either through default or demur.
    
    The former President and current BoD saw fit to circumvent normal loan
    approval procedures in place at DCU because they say these
    participation LOANS weren't loans, they were "investments".  Granted,
    these may have been "investments" to the BORROWERS.  But these were
    LOANS by DCU and should have been considered such, with all the normal
    loan procedures followed.  I'm quite amazed that a group of
    professionals cannot tell the difference between a loan and an
    investment.
     
    Now, some believe they are just covering their collective behinds with
    this "investment" line. *IMO*, they look like they don't know what they
    are doing or talking about when they claim "investments".  But I guess
    it beats the alternative of admitting they were loans and therefore in
    direct violation of DCU Bylaws.  Just gotta love those "investments". 
    Makes me wonder what else they have been investing in.  Prize Bulls?
    Judging from what we've been getting letting, I'd have to say so! ;-)
    

    Are "investments" specifically defined and discussed in the bylaws?
    If not, then this may be a documentable case of dishonesty.  If so,
    and if they meet the definitions then they may have been acting per the
    bylaws, in spite of it being unethical. 
    
    Seems to me that we need to push the idea that the BoD is not acting
    according to the bylaws rather than that they are acting unethically.
    Unethical behavior may be harder to define and accusations harder
    to document and defend.
    
    Steve

    	RE: .3
    
>    Are "investments" specifically defined and discussed in the bylaws?
>    If not, then this may be a documentable case of dishonesty.  If so,
>    and if they meet the definitions then they may have been acting per the
>    bylaws, in spite of it being unethical. 
    
    No, they are not defined in the Bylaws.  Everybody makes up their own
    definition though.  Some people "invest" in a car.  Some "invest" in
    the future.  Others "invest" in real estate developers on Cape Cod.
    
    BUT.  The BoD offered their definition of "investments" in a communique
    to the members in 1987.  They said "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."
    
    So let's ask the obvious:
    
    Were these loans to members?		    No.
    Were these loans government securities?	    No.
    Were these loans to a federally insured bank?   No.
    Were these loans "'speculative' instruments"?  (   )  You fill in the
    							  blank
    
>    Seems to me that we need to push the idea that the BoD is not acting
>    according to the bylaws rather than that they are acting unethically.
>    Unethical behavior may be harder to define and accusations harder
>    to document and defend.
    
    The word unethical has never been used here.  That is a very subjective
    determination that each DCU member must make.  I base my determination
    on facts and statements and actions of the BoD.  Do they match?  Are 
    they close to matching?  Are they complete and accurate?  Those are
    some of my not-so-subjective criteria.
    

    If you buy a bond you are making a loan to the government.  You collect
    interest on it at maturity, therefore it is an investment.

    RE: .5
    
>>    If you buy a bond you are making a loan to the government.  You collect
>>    interest on it at maturity, therefore it is an investment.

    Very good.  Government bonds are marketable securities and a valid 
    investment for a credit union because they are relatively low on the
    risk threshold.  These "investments" correspond to the "conservative"
    investment we were told was happening at DCU.
    
    Now, if DCU LOANS money to a trust company that is using the money to
    develop Cape Cod real estate, is DCU:
    
    	a. loaning money to a trust company, or
    	b. investing in a trust company, or
    	c. investing in Cape Cod real estate
    
    
    And when you answer, please also specify the Bylaw article that
    permits any of the above loans or the BoD statement that says they are
    investing in any of the above.
    
    Thanks again.
    

    I honestly wonder if a majority of the members would have cared if the
    "investments" had paid off instead of defaulted?  Is it only when we
    lose something that we cry about "ethics"? 
    
    Mangone was fired because he made some bad loans.  If they had paid
    off, he probably would have gotten a bonus.  There would not have been
    any questions about ethics.

    
    RE: .7
    
    Had DCU made public the fact that they were loaning money to Cape Cod
    real estate developers you better believe there would have been an
    outcry.  Credit unions ARE NOT BANKS!  Credit unions loan money to
    THEIR MEMBERS ONLY.  Credit unions "invest" in exactly what the BoD
    claims they were "investing" in.  The problem is that the BoD was
    saying one thing and doing quite another.  All under the rationalization 
    of "investing".
    
    How does the saying go?  "If it looks like a duck, walks like a duck and
    quacks like a duck, then it must be a duck."  Following the BoD
    investment logic, it would be something, but not a duck.  ;-)   We may
    have lost million$ but we must not lose our sense of humor.

    Perhaps somebody point out the flaws in my reasoning, or ask a
    BoD member what the flaws in my reasoning are, on the following:
    
    1. DCU has "too much money" they can't loan out.
    
    2. Members are griping that:
       a.  Loan rates are too high, compared to other institutions;
       b.  Interest rates paid are too low, compared to other institutions.
    
    3. Given the situation in #2, above, it would seem to me that DCU
       could reduce their loan interest rates and solve problem #1 and 
       problem #2a, and still make money because of #2b.
    
    Is DCU so woefully inefficient that it can't make money even when it
    charges above-market interest rates for loans and pays below-market 
    interest rates on deposits?  How much of a spread do they need to 
    make money, anyway?  If T-bills are paying less than 6%, as somebody
    said recently, it would seem to me that offering car loans at, say, 
    8% would get all they takers they could handle, be a real service to
    members, be reasonably safe as the loans would be secured by property 
    that has a well-defined value (the cars), and earn DCU significantly 
    more than they can get from T-bills...assuming DCU is even investing 
    in T-bills.  With DCU paying out at rates around 5%, I have trouble
    believing they couldn't make money on 8% loans.  So why aren't they
    offering us members 8% loans?

    Re .7:

>   I honestly wonder if a majority of the members would have cared if the
>   "investments" had paid off instead of defaulted?  Is it only when we
>   lose something that we cry about "ethics"? 
    
    Indeed, there was no squabble with the membership as long as the
    participation loans were "performing".  The NCUA, however, knows the
    difference and DID force the DCU to reclassify them from "investments"
    to "Commercial Real Estate Loans" during this period.  As long as the
    membership didn't ask any questions, I'm SURE the BoD wasn't going to
    volunteer anything that might make them look bad.
    
>   Mangone was fired because he made some bad loans.  If they had paid
>   off, he probably would have gotten a bonus.  There would not have been
>   any questions about ethics.
    
    Mr. Mangone was fired because he GROSSLY MISREPRESENTED these
    "investments" when he presented them to the the DCU BoD (and the DCU
    BoD was caught holding the bag).  He compounded his fraud by obtaining
    inflated appraisals when the BoD took the NCUA's advice to reappraise
    some of the properties in light of changes in the Cape Cod real estate
    market and the sagging Massachusetts economy.
    
    Through its dual failure to abide by both its claimed "conservative"
    investment policy and by the DCU Bylaws, which limit loans to DCU
    members ONLY, the BoD breeched its fiduciary responsibility to the
    membership -- IRRESPECTIVE of the fraud that was perpetrated on it.
    
    Unfortunately the BoD has shown itself unwilling/unable to accept
    responsibility for its actions, figuring that there's nothing more to
    be done now that Mr. Mangone is gone and various "hired guns" have been
    retained to recover as much as possible from the mess.  With only ONE
    (notable) exception, communications between the BoD and the membership
    have been marked with misdirection (remember the "Choices" flier?) and
    "posturing" instead of the candor required to get things back on track.
    
    Bottom line:  With regard to the success/failure of DCU, the buck stops
    at the Board of Directors.  While things are (apparently) going well,
    the BoD members are heroes.  Things are NOT going well at present
    (though the DCU is FAR more vulnerable to a "run" by disgruntled
    members than it is to insolvency due to its own mismanagement) and the
    BoD must accept responsibility for that, too.

    
    RE: .10
    
    Amen!!
    

    There was an answer (sort of) as to why DCU doesn't shoot for the best
    rates on loans and savings at the meeting this evening.  It is that the 
    emphasis is on providing lots of services.  The implication is that if you 
    want great rates on loans and savings then you'll have to give up some of 
    the services offered.  I expressed my opinion that I thought the consensus 
    was that better rates would be preferred over more services.  I think
    there were others there that agreed with me.
    
    Steve

Here are my impressions of the second meeting with the BoD.  This note
focuses mostly on the issues of greatest concern to me, and may not
match up with the impressions other people got.  In this note, I'll try 
as much as possible to simply report, and not comment on the issues.
Also, please note that my memory, observations, and notes are imperfect,
although I tried to be as accurate as possible.

The global summary is that I now understand many obscure things about the
past actions of the board, and I was reasonably impressed with several
board members -- and with the new president.  I have specific impressions
of the board members in attendence that I'd like to share, but perhaps I'd
better save that for a different (and more carefuly audited) note.

Topics covered in this note:
		The new president
		Making the Audit Reports Available
		Loans to Directors and Officers
		Why they made the Participation Loans
		The risk of participation loans
		Paying for the Participation loans
		Summary of Meeting


	The new president
	-----------------

First, the big news.  The new president, Chuck Cockburn, announced a
temporary elimination of the checking account fees.  His reasoning is
that fee increases should be planned as part of a broad strategy, not
implemented piecemeal.  He indicated that there very likely will be some
sort of fee when they get the grand plan ready in 3-4 months.  All other
new fees and all other features of the new Basic and Plus checking
still stand -- all he changed (with the approval of the board) was
to eliminate the monthly fees.  He made the point that if one member
has just a checking account while another uses checking plus other
services, the result of free checking is that the second member is
subsidizing the first one.  Since this is a cooperative, not a bank,
we need fairness.  He ended by saying that good service is his number
one concern, and one reason he took the job was the board's strong
interest in improving service.

Chuck summarized his goals as follows:  if this were a bank, the #1 goal
would be profits for the stockholders.  But since it is a credit union,
the two goals are excellent member services and sound financial condition.
He later added two more goals:  good rates for borrowers and depositors.
He pointed out that nationwide, consumer loans are decreasing, forcing
CU's to invest in other areas, mostly real estate.  Oh, yes, he commented
a bit on Mark Stenkraus' extensive comments on how the tough times in
Digital and in New England are putting pressure on the DCU.


	Making the Audit Reports Available
	----------------------------------

Danan F. (not sure of his name) was asked before he left if he favored
making the auditor's statement available.  His answer started by saying
that he favored releasing everything they were legally allowed to, and
ended by saying that they would release everything they were legally
required to.  I have no idea which he really meant -- several of his
statements were completely opaque to me, and as he had to leave, there
was no chance to question him further.  Some DCU employees seemed to
think that eventually letting Phil look at but not copy the auditor's
report constituted releasing it.  At least one board member (Jack
Rugheimer) seemed by his reactions to think that that was *not*
reasonable, though only Danan was speaking at that point.

Later on, Mark Steinkraus finally said he didn't see anything wrong with
giving people copies of the auditor's report, minus one or two footnotes,
provided the rest of the board agreed.  So there's been some movement
on this issue, it looks like, but no firm promises as of yet.


	Loans to Directors and Officers
	-------------------------------

Nobody on the board said they were in favor of disclosing their loans.
Danan F. said he was emphatically against it.  Susan Shaprio was quite
angry on the subject -- said the board had revealed their salaries, $0,
and that was all the disclosure she felt they should make.

I made a brief speech on the subject of how board members have lots of
influence over the DCU and we shouldn't just depend on the NCUA to 
make sure that things stay reasonable.  Chuck Cockburn jumped in with
a long list of ways that loans to directors and officers are audited,
including by a member committee.  I wasn't able to tell which of the
various things he described were in place prior to his arrival, except
for the member committee -- which I gathered had just two members,
one a member of the BoD, and is appointed by the BoD.  So as far as I can 
tell, the answer is that in the past there was little if any *independent*
oversight, but there is (or at least can be) in the future.

One board member asked me if board members should take loans from the DCU,
and said that he personally feels hesitant to do so.  I said they
shouldn't, but that's because I'm not convinced that there is effective
independent oversight.  Some board members (or was it the lawyer?) said 
earlier that since the NCUA audits loans, that was oversight enough.  It
might be enough to detect outright illegalities, but that's not the
question that I was raising.  My conclusion here is that things might be
ok, but I can't tell.


	Why they made the Participation Loans
	-------------------------------------

The loans were made from 1985 to 1989.  Charlene O'Brien pointed out
correctly that things looked very different in 1985 than they do now, and
the loans looked like a reasonable way to make extra money at low risk.
Jack Rugheimer said that even with the reductions in real estate prices
that started around 1987, the loans still looked good given what was on
the forms (false appraisals, false credit statements on the owners).  

Someone asked why all the loans were through the Barnstable Credit Union,
and the answer was because you don't want to do this unless you know
the people, and Mangone knew them and was an expert in Cape Cod real
estate.  So the board depended on his expertise, even to the point of
having him deal with the initial default in June, 1990!  A painful
experience for the BoD.


	The risk of participation loans
	-------------------------------

There was a lot of discussion about whether these are loans or investments.
Apparently we bought 80% to 90% of loans with a loan-to-value ratio of 
something like 80%.  As a result, we not only owned most of each loan, but
the ratio of our money loaned to the total value of the property was
around 70%, which isn't so far off from the % of money that the DCU is
willing to loan on ordinary mortgages.  The reason this isn't technically
a "loan" is because Barnstable did the forms work instead of the DCU.
I'm just an engineer -- if it quacks I want it called a duck, not a rabbit.
However, the board emphasized that they limited the total amount of the
participation loans to 6% of our portfolio, even though they did not limit
the extent of our participation in individual loans.

The bottom line here seems to be an admission that participation loans are
in general rather risky compared to their member loans, but that the board
thought the risk was minimized through Mangone's expertise.  Several
board members waffled badly on the subject of risk, which seemed to me
to damage their credibility.  Note that I am not saying that I personally
think they were a bad idea in 1985 -- I'm saying that it took a while to
hear a straight answer on the subject of the risk of this type of loan.


	Paying for the Participation loans
	----------------------------------

There was a lot of confusion on the point of why the DCU put $4.6M into
the loan loss reserve for 1990, but didn't mention that to the members.
At the time it was reserved, it was just an accounting procedure to be
more conservative, we were told, but after the fact the extra loan loss
reserve was advertised as money they had reserved to cover part of the
fraud that we didn't know about at the time it was reserved!  It sounded
to an engineer like the same money was being used for two purposes.

Later discussion (including comments by Abbot Weiss that extended after 
the meeting) suggested an answer to the inconsistency.  If I understood
Abbot correctly, he said that the NCUA came through and insisted on the
high loan loss reserve payment, for reasons that were not clear to the
board.  His theory is that the NCUA did this because they knew of the
participation loans and knew or suspected trouble at the Barnstable CU.
So the board didn't report the $4.6M as a notable event because they didn't
think it was one -- until after the fraud was discovered.  Now, they've put
in still more money (to a total of $7M?) and need $1M more to cover us
for loan losses including the fraud.  They emphasise that they hope to get
back most of the $18M in various ways, but in fact it could take a long
time to collect from Mangone, and we don't know how much we'll get.

There was also some discussion of the fact that even after the fraud was 
discovered, the tone of the DCU report was very upbeat, with a big graph
showing a steadily increasing amount of money, and thus disguising some
of the words in the brochure that suggested that things weren't all good.
The board, and especially the lawyer, Jim Rice, kept insisting that we'll
get money back from Mangone and we shouldn't act like that money is lost.
He didn't understand or didn't accept several members doubts on that
subject.  


	Summary of Meeting
	------------------

I think the board needs to understand (and perhaps does understand better
now) that a big reason behind the anger expressed toward the BoD is
because members had no way to find out anything about the participation
loans or the extra loan loss reserve until after the fraud was public.
This plus the apparent inaccessibility of the board until recently made
the whole thing look like a whitewash (a word one attendee used).  
The lawyer (Jim Rice), naturally, objected instantly to that word, but
that's certainly what it looked like if one were a bit suspicious.
For that matter, Jim Rice jumped in a lot, which in my mind created the
impression that the board were being represented by counsel instead of
meeting directly with the members.  Mark Steinkraus said Jim *should*
speak, because he *is* the DCU's lawyer, but it seemed to me to simply
add to the hostility when people wanted to hear what board members had
to say and Jim Rice insisted on answering for them.

At the end, Charlene O'Brien asked what the fundamental issues were, beyond
specific questions like why did they get AutoNet & does it cost the DCU
anything (A: to pull in auto loans and nothing after a low setup charge).
My take on the fundamental problem is that for various reasons, we weren't
getting straightforward answers & data from the board, which (in light of
the many ongoing banking and S&L scandals) raised lots of disturbing
questions and engenered a great deal of reasonable anger when those
questions were not answered.  Another clear point is the percieved past
unresponsiveness and poor service of the DCU, which also ties in to the
feeling of the BoD and DCU officers being a closed club that doesn't
listen to the peons/members/owners and dismisses complaints in the notes
file as whining.  There are various opinions as to whether this is reality
or just a perception problem, but either way, it's a problem.  Chuck
Cockburn's attitudes on this subject are a strong breath of fresh air.

	Enjoy,
	Larry

    .12 certainly has the answer: cut down on those services and cut down
    on the overhead, so you can reduce the spread between interest charged
    and interest paid.  The best way to pull in Auto loans is to have a
    damn good rate!!!!!!  Never mind gimmicks.....  The most important
    service DCU offers me is the ability to get access to my money IN THE
    WORKPLACE so I don't have to waste time driving to a bank.
    
    Ron

re: .23, Larry


Thanks for the comprehensive report, Larry.

I wish Chuck Cockburn the best of luck in managing the DCU under a new BoD.

Why is it I keep getting the feeling that Mr. Jim Rice, rather than being
an attorney for the DCU, is a mouthpiece for the BoD?

-Jack

    Aw, Jim's just doing his job.  He doesn't want the BoD to say anything
    stupid that would make his job even harder.  He got on Phil when he saw
    that Phil was asking questions knowing in advance what the answers were
    and that it would make the BoD look bad if not diverted.  Wouldn't you
    want Jim on your side?  Keep in mind that if there is a new BoD Jim
    will be answering to them ...
    
    Steve

re: .16, Steve

These comments are not a rebuttal to your statements, Steve. I made the
assumption that some of your statements/questions were rhetorical. Obviously,
some of my questions or responses are rhetorical as well.

>    Aw, Jim's just doing his job.  He doesn't want the BoD to say anything
>    stupid that would make his job even harder.

But if he's the DCU's attorney, rather then the BoD's, why is he even entering
into discussions which are directed not at the DCU, but at the BoD? They
(the DCU and the BoD) are _NOT_ one in the same. At least I hope they're not
or we're in even bigger trouble that I thought!

> Wouldn't you want Jim on your side?

Depends upon whether or not I felt I needed him to defend my actions. If I were
a DCU Board Member, I damn well wouldn't want to be even remotely associated
with DCU's attorney at this juncture. But then, if I were a DCU Board Member,
I would have stepped down by now in order to protect my own personal integrity.

> Keep in mind that if there is a new BoD Jim will be answering to them ...

Jim should be answering to the DCU as an organization, not to the overseeing
body, the BoD. Anything else smells of conflict of interest to me.

-Jack

    Whatever.  The impression I got was that Jim is working closely with
    the BoD.  Personally, if I had an attorney I'd want him to be just
    plain nasty to anyone that might make trouble for me.  Wouldn't want a
    weanie going after those millions that were lost.  He'd better be
    aggressive, too.  During the meeting Jim made it clear he was no weanie 
    and that he was aggressive.  I rather enjoyed it.
    
    Steve

An attorney who is no weenie and who is aggressive is just what's needed.

But who is it who needs this attorney?    The membership.

I think what's worrying Jack is that the attorney can too easily have
the appearance of representing the BoD and/or DCU management AGAINST
the membership.

There are many in the membership these days who may not be reassured that
"Jim is working closely with the BoD".

    
    Re: .18
    
    > During the meeting Jim made it clear that he was no weanie
    > and that he was aggressive.
    
    We don't need an attorney who is trying to run things and be
    intimidating to the people who are paying his salary!  If this
    attorney is employed by the DCU, that means that he works for US
    and our interests not the BOD or he ought to shown to the door.
    If his loyalty is to the current BOD then I'd like to see the agenda
    item calling for removal of the BOD amended to send him packing to.
    
    Steve
    

re: last few about the attorney

	This is no defense of the BoD or anything, but I do feel that  at
	this  point  in  time, it is appropriate for the Board to have an
	attorney present at any  time  they  are  openly  discussing  the
	matter of participation loans.

	Remember that the board is involved in legal action against their
	former president regarding the Cape  Cod  area  loans.   Anything
	that  is  said  in public could be used either in court or during
	out of court negotiations regarding this matter.

	I can see a scenario in which the board essentially admitted that
	they  did something wrong in all of this, and Mangone's attornies
	jumping on it as a means of getting Mangone off.

/Chris

    
    Re: .21
    
    I agree with you.  It is reasonable because of the litigation that an
    attorney be present at any meeting so as to advise anyone present
    either on the BOD or among the membership as to how to proceed so that
    nothing coming from the meeting might compromise DCU's case against
    Mangone. No problem with that.
    
    What I object to is an attorney paid by the DCU, you and me and 87,998
    others that is, helping the BOD to slither out of any responsibility
    they may have in the matter.  The description of that attorney's
    behavior at the meeting suggests to me that that is what he was trying
    to do.  If that's a wrong perception on my part, then perhaps someone
    who was at the meeting and observed that behavior can set me straight.
    
    Steve
    

    Good points there.  Listening to the attorney, I kept hearing
    assertions that the BoD was tricked and lied to and that that was the
    reason for the loss.  But ...  I was still bothered by several things.
    
    Then mentioned that the root of it was that they "trusted" Mangone. 
    They had no reason not to trust him.  My feeling was that they did have
    reason not to trust him.  The trust they had in him was for $18M, but
    he was only bonded for, what, $6M?  $18M was given to a company on whose 
    BoD he had been.  They should have smelled a conflict of interest here.  
    This very large amount of money carried with it risk in the interests
    of non-members rather than members.  This is not a big deal if these
    were "investments", but by today's DCU standards these would not have
    qualified as investments.  By the standards of most of us (using the 
    "quack like a duck" rule) these were high risk loans to non-members all 
    along and were routed through the BoD because they would not have been 
    able to pass the normal loan approval process.
    
    Granted, the RE market was booming at the time that these loans were
    made.  A lot of bankers were investing unwisely into the highly
    speculative RE market.  But, DCU is specifically to be investing
    conservatively.  Methods had been put in place specifically to avoid
    making risky loans to outside interests and they were effectively
    circumvented.  It can be argued that Mangone was very clever in doing
    this.  But, it appears to me that there were warning signals from the
    start that should have kept the BoD from approving the transactions.
    
    Anyway, back to the point.  Jim was dealing with US, it's true.  But,
    we are free to talk to the press and what was being discussed directly
    affected his concerns and arguments that he needed to recover the lost
    funds.  If the BoD has to accept some portion of the blame, we may not
    recover as much.  Unfortunately, the BoD probably does need to accept
    some portion of the blame, IMO.
    
    Steve

    
    Re: .23
    
    Agreed.  My point is simply that any attorney acting in such
    a way as to be representing any members of the DCU BOD either
    individually or collectively should be retained specifically
    by BOD member(s) with their personal funds spefically for the 
    purpose of looking out for their personal interests.  It is not
    just a matter of who is paying the attorney but also that if the
    DCU attorney is spending his retained time looking out for the
    DCU BOD then who is looking out for the DCU?
    
    Steve
    

    
    RE: the attorney.
    
    One of my confrontations with this attorney came when I asked, "Is a
    $2.6 or $4.5 million loss a significant financial event in your
    opinion?"  Why did I ask this?  Two reasons.  
    
    One, the BoD earlier in the meeting indicated that they kept the 
    participation loans at between 5-6% of DCU loan portfolio.  That's nice, 
    but it also means that they were willing to expose DCU to more of these 
    loans as DCU increased in total assets.  So to the BoD $18 million was 
    considered a low amount in comparison to DCU's total assets.  The fact 
    that $18 million is a lot of money was minimized by comparing it to the 
    huge assets DCU has.
    
    Second, significant financial events should be noted SOMEWHERE in the
    annual report!  Where was it?  No where to be found.  Until each and
    every one of us takes vacation time and drives (or flies in from CXO)
    to DCU headquarters and requests the auditors notes to the financial
    statements. 
    
    My other confrontation with the BoD lawyer (he is definitely THEIR
    lawyer) was when I asked each individual BoD member if at any time in
    the review and approval meetings for these participation loan, did they
    at any time raise the issue that the names on the applications were NOT
    DCU members.  The lawyer interrupted and try to deflect the question.
    I do have answers on tape though.  Persistance does pay off.  At one
    point he asked me if I was an attorney...  This whole mess makes me
    wish I was.
    
    The good news is the batteries in my tape recorder didn't run out.  The
    bad news is I only brought 3 hours of tape and missed the last 15-20
    minutes.
    
    I think it is time that DCU pay for a lawyer of OUR choosing to
    represent the membership in general.
    
    

    Re:
    
    >My other confrontation with the BoD lawyer (he is definitely THEIR
    >lawyer) was when I asked each individual BoD member if at any time in
    >the review and approval meetings for these participation loan, did they
    >at any time raise the issue that the names on the applications were NOT
    >DCU members.  The lawyer interrupted and try to deflect the question.
    >I do have answers on tape though.  Persistance does pay off.  At one
    >point he asked me if I was an attorney...  This whole mess makes me
    >wish I was.
    
    Thank you.  Now is your statement that he is THEIR lawyer from your
    perception of how he behaved or from a specific statement to that
    effect made at the meeting so that it would be clear whom he was 
    representing.  Not that it matters, I suppose, because in either case
    it makes the BOD look bad.  In the first case, why should a DCU
    retained lawyer be protecting the BOD from the righteous indignation
    of the people who are PAYING HIS FEE and in the second why would the
    DCU BOD believe they needed THEIR lawyer present.  Is there yet even
    more information that we don't have?
    
    The more I sniff the more it stinks.
    
    Steve
    
    
    

    Um, DCU's lawyer representing its board of directors is no different
    from Digital's corporate counsel representing Digital's board of
    directors.  The lawyer represents the organization, of which the board
    is the head.  IMO, DCU's lawyer was doing his job properly.
    
    Whether or not we members like this has nothing to do with it
    happening.  You should expect the lawyer to be involved in any dispute
    between the board and the membership.
    
    Wes

    As .27 says, the Lawyer is representing the DCU.  The BoD was elected
    by the members to make decisions on behalf of the membership.  The DCU
    is involved in a legal battle to recoup losses due to questionable
    business dealings on the part of the past president.  If someone on the
    BoD says something inappropriate in regards to the case, we the members
    might have to eat the whole $18 mil, therefore presenting a unified
    front and having a lawyer present makes sense to me.
    
    Whether you agree with the BoD or not, they are the mouth and mind of
    DCU.  And the membership put them there.

re: DCU == BoD, DCU's Lawyer == BoD's Lawyer

This is an interesting opinion, but I'm not sure that it's technically
correct. The DCU is owned by its membership, just like DEC is owned
by its stockholders. If there is a conflict between the owners and the
BoD (of either DEC or the DCU) they should each be represented by
separate counsel, if counsel is needed at all. In the case of DCU vs. Mangone,
for all intents and purposes the DCU and the DCU BoD are one in the same.
The conflict we're discussing here is a different one. As I said before,
the BoD is _not_ one and the same with the DCU for the purposes of the
problem at hand or we're all in deep sneakers.

And, no, it would not be appropriate for the DEC corporate law depeartment to
represent DEC's BoD in a conflict with the stockholders as a controlling
group holding ownership. Think about it for a minute.

-Jack

Let me make a few points about the lawyer, Mr. Jim Rice, for the benefit 
of those who weren't at the meeting.

First, he WAS NOT THERE to represent the BoD.  His job is to prosecute 
lawsuits relating to the fraud, and he was introduced as being there
to answer questions relating to the fraud.  He was NOT there to represent 
or speak for the BoD.  But that's not how he acted.


1)  When people would ask the BoD direct questions about what they did,
what they thought, or what they were going to do, the lawyer would jump
in and stop the question in various ways.  This went far beyond simply
intercepting questions relating to the fraud lawsuits.

2)  I started a comment about how lots of us knew 3 years ago that real 
estate prices had started going down the year before, and that (ahem)
lawyer loudly interrupted and started attacking and belittling me.  I 
hadn't even asked a question yet!  If ever I speak to the board again,
I'm going to start any statement by telling that lawyer to butt out
unless a board member invites him to speak, or unless he feels a need to 
advice a board member -- but don't answer questions addressed to the BoD.

3)  Theoretically, the BoD called the meeting so that there could be
discussion between the members and the BoD.  It is a symptom of what
is wrong with the BoD that, rather than talk directly with members,
several of them wanted a lawyer to talk for them.  Re .27, this wasn't
a dispute, this was a discussion -- questions and answers -- and the
board explicitly invited the questions.  No one accused the board of 
acting illegally -- people wanted to know what they did and why.  If 
they need a lawyer to keep us from asking those questions, then I find 
that significant.


People who weren't at the meeting can easily think of logical, rational
reasons for why there was a lawyer there and why he talked.  I thought of
the same reasons while reading about the first meeting, but they simply 
don't apply in this case.  I went to the meeting because I didn't feel 
we were getting straight answers from the board, and also as a check on
whether the data I was reading here was accurate.  I was reasonably
impressed with a couple board members, but the board as a whole, and
several members in particular, seemed hostile to the whole idea of
accounting for their actions to the members.  The lawyer's antics
certainly enhanced this impression.

	Larry

PS  -- I'm not involved with the folks pushing for the special meeting
(except in that I signed the petition).  I'm just a member and notes
file reader who wants a BoD that will give straightforward answers to
the questions that member/owners have a right to ask!  

PPS -- Not all good lawyers are mad-dog attackers, and not all good 
lawyers speak to confuse.  I've met examples.  I believe there's an
example on the current board.

    The BoD, representing the DCU is taking legal action against the past
    president.  The BoD is being asked many questions pertaining to this
    legal action by the members.  Doesn't it make sense to have the DCU
    lawyer there to make sure nothing is stated on either side that might
    jeopardize the DCU's case against Mangone?

re:  -1

As another meeting attendee, I speak from personal observation. 
I agree with the premise of having the lawyer at the meeting to
ensure no one says anything to jeopardize the suit.  what i
noticed, and what i think others are commenting on, is that mr.
rice's comments seemed, at times, to extend beyond that scope. 
at least to me, non-lawyer that i am. 

At one point Mr. Rice referred to himself "as their [the board's]
lawyer".  This was immediately questioned by one of the attendees
and Mr. Rice then said that was not what he meant. 

    
    
    RE: The lawyer..
    
    I noticed the same trend at the first informal meeting. I think someone
    did ask the lawyer to butt out at one point as the question wasn't
    directed at him and had nothing to do with the Mangone case.
    
    Maybe we need our own lawyer..

    Hey, Phil!
    
    Need to get someone to transcribe your tapes!  I'm not volunteering,
    BTW.  But, you probably recorded some stuff that would make interesting
    reading about now ...  :)
    
    Steve

The "IMHO" light is now flashing...
	In  disputes between company management and stockholders, usually
	both sides wind up with lawyers representing their interests.  In
	cases like this, however, usually it's the BoD that's being sued,
	attacked,  or  otherwise  hassled  by  some  of  the stockholders
	("Smith vs.  Jones, Roberts, Johnson, and  Silvers,  jointly  and
	severally  as  the  Board  of Directors of the XYZ Corporation of
	America').  In the particular situation with DCU, there  are  two
	things going on:
		1.  The BoD is suing Mangone
		2.  The DCU membership is actively attempting to make
		    changes to DCU that are contrary to the BoD's 
		    desires.

	In   cases  between  company  management  and  stockholders,  the
	management usually has its own  lawyers,  hired  with  their  own
	money,  to  represent them.  Usually you'll see a team of lawyers
	acting as a confederation, where one or two of them speak for the
	Board as a whole, and the others represent the individual members.

	In  our  case,  having  a  lawyer present to represent the BoD in
	normal discussions with the Board not  directly  bearing  on  any
	litigation  is  wholly inappropriate if the lawyer is paid by DCU
	and not by individual board members.  It seems to me that this is
	a  conflict of interest, and that we need to get to the bottom of
	it immediately.

	As shareholders, we have the right to know  how  this  lawyer  is
	being  paid, and who he is working for.  If he is "DCU's lawyer,"
	then he works for us, and should not be there to shield the board
	from our attempts to facilitate change.

Remember, it is illegal to hunt lawyers within 500 yards of a BMW
dealership (relax!  I'm just kidding :-)),
/Chris

>	In  our  case,  having  a  lawyer present to represent the BoD in
>	normal discussions with the Board not  directly  bearing  on  any
>	litigation  is  wholly inappropriate if the lawyer is paid by DCU
>	and not by individual board members.  It seems to me that this is
>	a  conflict of interest, and that we need to get to the bottom of
>	it immediately.

  Somehow I think that this is unfair.  If DCU was paying the BoD Big
bucks then maybe it is reasonable for them to pay for representation.
Since they don't get compensation for their work it only seems reasonable
that there should be some benefits.  Those being at a minimum legal
representation.  If everyone who gets on the BoD risks getting sue'd
by a couple of DCU members who don't like what is going on then there
would be NO members of the BoD because we ALL know that out in the whole
DCU population there must be someone who is SUE crazy...  Otherwise there
would be no rules against shooting Lawyers ;-.] ;-.]

re: .36

Relax.

Their "posession" of elected positions as board members entitles them to:
      - Carry out the direction of the DCU as charged
      . Period

It doesn't "entitle" them to free legal counsel at our expense. What sense
would that make? Accepting a non-paying position requires sacrifice, by
definition. Tough. This is not some New England town government which
is guaranteed free of indemnity for their actions performed in the course
of duty.

But the point of the matter here is not that the members of the BoD risk
getting sued. I haven't heard anyone proposing that. The whole point of the
matter is that the BoD are, (IMHO) hiding behind DCU's (read: Our) attorney
to avoid answering our questions.

If they (the BoD) think they require legal counsel to deal with us at this
time, then by all means they should retain same. Personally, I can't fathom
why they (BoD) should feel the need for legal counsel when dealing with us.
If they do feel that way though, I'm deeply disturbed. I don't want to pay for
it as an owner of the credit union. And if they're supposing to use "our"
lawyer (DCU's) to deal with us in matters separate from the Mangone case, I
won't stand for it.

Do you really want to?

As another responder so aptly stated it a while back, for the BoD to use the
DCU lawyer to help them slither away from any responsibilities for the recent
fiascos is inexcusable.

-Jack

    The BoD is not going to line up lawyers to fight against a bunch of
    disenchanted DCU stockholders.  This is not like a big corporation
    against a bunch of little guys.  Let's give them at least a little
    credit, guys.  They are volunteering their time, but they're not
    stupid.  The position gives one prestige and probably has a lot to do
    with helping a career at Digital if one is into upper-level management.
    Now, hold down the boo's and hisses.  It is not unreasonable and may
    even be admirable for an upper-level manager to do a stint of volunteer
    time by serving on the BoD!
    
    Now, let's assume that the average BoD member just messed up and not 
    attribute everything to dishonesty and politics ... yet.  There is one 
    major difference between the BoD of the DCU and the BoD of, say, a
    bank.  That is, there are the DCU bylaws!  The BoD is being challenged
    based on those bylaws.  There will be no lawyers in this because there
    will be no court hearings over this!  The folks are on the BoD are
    elected by the shareholders and, surprise, if they mess up the
    shareholders can petition to have a special meeting that has on its
    agenda the removal and reelection of board members!  This is exactly
    what's happening now and things are proceeding according to the bylaws.
    
    The only way I see "us" having to get lawyers is if somehow the bylaws
    get thrown out or modified.  And, that's not on the agenda of the
    special meeting.
    
    Steve

    
      Unfortunately,  I couldn't attend (but will happilly put in a 
    few hours transcribing tapes as penance...  :^)
    
    
      After reading all the discussion about the lawyer answering
    questions,  I _still_ think the BOD and the Lawyer were correct
    in trying to deflect certain types of questions:
    
      Remember,  DCU's position is that the BOD was the victim of
    Fraud.   Fraud differs from simple stupidity (which has no legal
    remedy) in that in fraud,  one party used his "Superior knowlege
    or position" to misrepresent a material present or past fact 
    that the other party could not be reasonably expected to know
    or ascertain through the exercise of DUE DILIGENCE, to induce
    that party to act in a manner that they would not otherwise
    agree to.
    
      I know nothing about DCU's case against mangone,  but my
    guess is that it is a Civil Suit, in which DCU is seeking 
    Tort  damages for  Fraud (among other things)  based
    on the fact that Mangone used his knowlege and position 
    (as a cape cod real estate _EXPERT_)  to defraud the BOD
    through their "justifiable" reliance on his knowlege as an
    "Expert".
    
      However,  Mangone's defense could very well hinge on showing
    that the BOD was negligent (or incompetent)  and would have
    known the true state of affairs had they exercised the due
    diligence required by their position.
    
      As I said,  there is no legal remedy for simple stupidity,
    or entrance into a non-benificial contract.  IMHO,  the lawyer
    is justified in attempting to deflect _ANY_  speculation on 
    the competence or correctness of the boards actions.  His case
    probably hinges on maintaining that the BOD acted correctly
    and completely.  Any insinuations to the contrary could seriously
    damage his case.
    
    
    						-al
    

    The ability to get back the $8million or whatever is dependent on a
    couple things,    proving your case [winning], and COLLECTING.
    This gentlemen has a few people after various sums.  Is his pocket
    really that deep?  If its unrealist to think we can collect, even if
    we win, why are we spending big bucks/worrying over a lawsuit?

    
    >Is this a foolish lawsuit
    
      Not if you're a  lawyer...  :^)
    
      Seriously,  I forget the fancy name for it,  but in some cases,
    failing to exercise a legal right within a reasonable amount of 
    time is tantamount to waiving it.
    
      Furthermore,  by filing (and hopefully winning),  DCU becomes
    a creditor,  and stands to gain at least something if/when Mangone's
    creditors force him into bankrupcy.
    
      If what I understand about the default loan situation is true,  
    we've already taken the hit and written off much of the defaulted
    loans.  Anything recovered from the Mangone lawsuit should show
    up as improved earnings some time in the future...
    
    
    						-al
    

    
    First thank the several who were at the meeting and commented
    on their observations.  I guess I've understood you correctly.
    
    Re: .40
    
    I could agree with you totally IF the lawyer and the BOD had
    at the beginning of the meeting made it clear that in the
    course of the meeting, issues and discussion could arise that
    could compromise the DCU case against Mangone and that when/if
    that happened that the lawyer would advise ALL present and
    suggest that it be pursued at another time.  That would be
    perfectly reasonable.  In other words, it would be understood
    UP FRONT that the presence of the lawyer was to advise and
    protect the rights and interests of the entire assembly.
    Therefore, the question is is that what the lawyer was doing?
    From the observation of several it seems the answer is no.
    
    If so, then WHY was he there?  I can't think of any other reason
    for him to be present and to keep interrupting the discussions than
    to be looking out for the interests of the individual members of
    the BOD.  Why should an attorney paid with OUR money be spending
    his time defending persons whom we think may, note I said may,
    have acted inappropriately on our behalf?
    
    I think the worst that the current BOD has to fear is being
    turned out of office because of lack of faith among the DCU
    membership as to their ability to lead the DCU out of this mess
    and to pursue a new direction in keeping with the wishes of the
    membership.  Frankly, considering the seriousness of this whole
    thing, if that's the worst that can happen then they're not in such
    bad shape as I hope Mr. Mangone will find himself.
    
    Steve
    
    

        I'd like to take this off the over-done subject of the lawyer.
        
        Way back someone mentioned the issue of DCU loans to the BoD.
        Perhaps the question posed at the time was inappropriate. The BoD
        should have some privacy in normal DCU loans, just as the rest of
        the membership does. What SHOULD be asked and answered is "Do any
        of the BoD have any loans from DCU that are not available to the
        regular membership?" If any answer other than "Absolutely not" is
        forthcoming from any board member, then there SHOULD be a serious
        investigation.
        
        Furthermore, I'd expand this question and ask if the DCU has any
        remaining loans or "investments" other than loans to members under
        the generally available loan programs that ate available to all
        members. I wonder if there are any more skeletons hiding in the
        DCU closet?

    One item that one must keep in mind:
    
    How much will it COST to recover the money?  If we spend 2-3 mil trying
    to recover it and never do, then you can say we lost $21 mil but if
    they recover $8 mil then you can say we lost $13 mil ONLY...
    
    	-mark

    
    RE: .44
    
    The BoD won't give us copies of the auditor's notes.  I'm more than a
    bit pessimistic about their willingness to open the doors of their closets
    for whatever skeletons there may be to fall out.  Maybe nothing but
    dust in there too.  Never know 'til you open the door though.  And open
    doors have been hard to find at DCU.
    
    IMO, people in positions such as the BoD expose themselves to more
    careful scrutiny when they take the position.  I simple "trust me"
    won't due.  While their home mortgage or car loan is of little concern,
    the fact that they may have large sums of DCU loans on things like
    commercial real estate should be known by the members.  Now large
    would have to be defined.
    
    An independent investigation by individuals not beholden to the BoD is
    almost mandatory in situations like this.  If I were a BoD member, I
    would welcome it to make sure people knew I had nothing to hide and
    that I had performed the duties of my position as expected.
    

    
    RE: .45
    
    Good point.  And this was brought up at Tuesday's "informal discussion
    with the BoD" (and lawyer).  Everybody should be aware that this isn't
    a contingency arrangement as far as we've been told.  The cost of
    lawyers appraisers and "real estate workout artists" are being
    charged to DCU as we speak.
    
    Any guesses as to whether we will have a seperate line item on the DCU 
    statements for this year?  Maybe an auditor's note is more appropriate
    due to the confidential nature of the subject.  ;-)
    

    
	RE: .26
    >Thank you.  Now is your statement that he is THEIR lawyer from your
    >perception of how he behaved or from a specific statement to that
    >effect made at the meeting so that it would be clear whom he was 
    >representing.  
    
	Absolutely my perception, but not only my perception.  We already 
    stated what the BoD said he was there for.  Maybe at the next "informal
    meeting" he should state his piece and then leave.  All DCU members had
    to show a badge and sign in.  Gee, I wonder if we brought a lawyer if he
    would be allowed to come in?
    
	RE: .34
    
>    Hey, Phil!
>    
>    Need to get someone to transcribe your tapes!  I'm not volunteering,
>    BTW.  But, you probably recorded some stuff that would make interesting
>    reading about now ...  :)
    
	Yes.  In all my spare time I will relive the special time I spent
    in the "informal discussion with the DCU lawyer".  It's hard for people
    that weren't there to really get a feel for the types of questions he was
    answering vs. the questions we were told he would be answering.  Also,
    hard to grasp the frequency that he answered questions that were not
    posed to him or directed to him by a BoD member.
    
	Re; .40
        
    >  Unfortunately,  I couldn't attend (but will happilly put in a 
    >few hours transcribing tapes as penance...  :^)
    
    Careful what you offer, even in jest...  ;-)  Wonder if there are
    services that do this sort of thing?
    
    

    re:. 48
    
>	RE: .26
>    >Thank you.  Now is your statement that he is THEIR lawyer from your
>    >perception of how he behaved or from a specific statement to that
>    >effect made at the meeting so that it would be clear whom he was 
>    >representing.  
>    
>	Absolutely my perception, but not only my perception.  We already 
>    stated what the BoD said he was there for.
    
    And, don't forget, *WE*, the DCU membership were paying this clown
    probably a minimum of $125 PER HOUR to be there to block questions and
    answers that did not pertain to the lawsuit, the only thing he SHOULD
    have been involved in.
    
    I too was unable to make the meeting, but the more I read here, the
    less secure I feel about DCU.
    
    -Bob
    

On the subject of loans to BoD members.  I asked at the meeting what 
oversight there is, and got a long answer from the president (with some
comments from board members), which I think boils down to three things:

    1)	Various ways the president can find out if loans to BoD members
	are ok.  This is good, but not enough -- Mr. Magone proved that
	we shouldn't trust any one individual (or group of individuals
	who have the same financial interests, for that matter).

    2)	The NCUA reviews loans to BoD members.  I'm not sure what that
	means exactly, but I expect they mostly focus on the legality
	of loans.  I'd like oversight that checks on the appropriateness
	of loans to BoD members, and it's riddiculous to maintain (as
	one board member did) that NCUA oversight is sufficient.

    3)	People beholden to the BoD review loans to the BoD.  This includes
	the BoD itself, plus a "member committee", which is appointed by
	the board.  They are even allowed to appoint a board member to the
	oversight committee that is supposed to be checking on them!  If
	I understood correctly, this committee currently has just two
	members, one of whom is in fact a board member.

In other words, there is no independent oversight whatsoever of loans to
members of the Board of Directors.  I don't blame them for not wanting to
reveal their loans to the general membership, but I consider them to be
incredibly arrogant when they cannot understand why "trust us and trust
people beholden to us" isn't an acceptable answer to the question of
whether loans to board members are being made in a reasonable way!
I'm not saying that they *are* abusing their position, I'm saying that
we have a right to *hear* that they aren't from an independent source.

	Larry Seiler


PS -- About the lawyer:  if you weren't there, don't be too quick to
assume that he was just doing the right think for the lawsuit.  No doubt
he was doing that, but that wasn't all he was doing -- and he emphatically
wasn't doing what the board said he was there to do.  But even if that's
all it was, and everyone there was mistaken about what he was doing, are 
we supposed to wait years until the lawsuit is over before we question the 
board about anything?  

PPS -- Someone pointed out to me that when Digital hires a lawyer to 
prosecute a patent infringement (for example), that lawyer gets a cut
of the award, as well as hourly pay.  I'd surely love to know what 
arrangement there is to pay Mr. Rice for the Mangone lawsuit.

    
    After I reviewed the Bylaws I asked Mary Madden who was on the 
    Supervisory Committee.  She told me it is was Jeff Gibson.  We got a
    totally different answer at the meeting.  The Supervisory Committee has
    tremendous power.  It can even dismiss BoD members if I recall.  Will
    have to double check Bylaws since I don't have them committed to
    memory, yet.  I will post the appropriate Bylaw sections when I have them.
    
    Here is a brief summary of interesting BoD duties:
    
    	1. Appoint Nominating Committee who are responsible for reviewing
    	   and approving people who may run against the BoD.
    
    	2. Appoint Supervisory Committee which has power to remove BoD
    	   members.
    
    	3. May edit and review candidate write-ups.
    
    	4. Review and approve loans to BoD members.  Director taking out
    	   loan may not be present during process.
    
    
    They also wrote member participation on the Credit Committee OUT OF
    EXISTENCE with their changes to the Bylaws.
    
    And they wonder why the BoD is considered a club by many???
    

    re: -.2
    
    The impression I was given at the meeting was that the legal services
    were going to cost a lot of money.  But, that figure was not disclosed.
    Also, although the number of $8M expected losses was pegged, I had the
    impression that this number was realistically the optimum loss.  Out of
    the $18M I had the impression that the number could jump to $12M or so,
    not including the cut going to the legal services.
    
    Steve

    
    RE: optimum loss
    
    Loans			$18,000,000
    Estimated Current Value	 (3,000,000)
    Expenses:
    	Lawyers				  ?
    	Appraisers			  ?
    	"real estate workout		  ?
    	 artist"
    				-----------
    Largest Potential Loss	$15,000,000 (plus unknown "substantial"
    					     expenses)
    
    Potential Recoveries:
    	 $6,000,000 Bond on Mangone
    	$10,000,000 civil suit against Mangone
    	? from any further suits against parties allegedly involved
    
    (Mangone and others also named in $47,000,000 NCUA suit so order of
     collection may affect what is left for DCU to collect.)
    

              <<< BEIRUT::R7XBOK$DIA0:[NOTES$LIBRARY]DCU.NOTE;4 >>>
                                    -< DCU >-
================================================================================
Note 268.52     RESERVED: Discussion of the 8/21 meeting with BOD       52 of 52
MOOV01::LEEBER "Carl MOO-1(ACO/E37) 297-3957(232-25" 51 lines  17-SEP-1991 17:22
                           -< Official DCU Response >-
--------------------------------------------------------------------------------
    This is an official response by Patti D'Addieco of the DCU. The response,
    dated 17-SEP-1991, applies to this note topic and is included below.
    See note 2.22 for more information.

    Your comments on this response should be posted here or directed to
    to DCU directly at Mary Madden's number (dtn) 223-6735 x207 or
    Patti D'Addieco's number (dtn) 223-6735 x239.

    Carl Leeber
******************************************************************************
         On Tuesday, September 10th, DCU's Board of Directors met with 
         DCU members in the second of two informal meetings about the 
         progress of the credit union.  Ten members, including four 
         members who attended the previous meeting, participated in an 
         open discussion and a question and answer period for over 3 
         hours.
         
         Introduced at the meeting was DCU's new president, Chuck 
         Cockburn.  Mr. Cockburn spoke about the future goals of the 
         credit union, which include quality member service and 
         strengthening the financial condition of DCU through 
         improved communications, budgeting and strategic planning.
         
         As president/ceo, Mr. Cockburn announced that he will 
         re-evaluate DCU's current operating plan.  Until analysis is 
         concluded, the checking account fees, previously announced 
         for 9/29/91, will not be implemented at this time.  The 
         pricing of this product and others will be re-evaluated.  It 
         is anticipated that some fees, including checking account 
         fees, will be implemented in the future.
         
         After Mr. Cockburn concluded his address, an open discussion 
         and question and answer period occurred.  Many valuable ideas 
         and suggestions were offered by the attendees.  Some of the 
         topics discussed included: action taken with regard to 
         participation loans; DCU's financial reports; general 
         investment philosophies; and DCU's By-laws and financial 
         position.  A number of situations were clarified and a 
         clearer insight of DCU's operations was provided.
         
         Specific questions and answers from the meetings will be 
         communicated to all members in our October issue of NETWORK.
         
         On behalf of the entire board and DCU management, we would 
         like to thank those members who attended these informal 
         meetings.
         
         Sincerely yours,
         
         Mark A. Steinkrauss
******************************************************************************

    I've been trying to understand why there is such a disparity between
    the number of people that have attended the 2 informal meetings (less
    than 50 the first time and less than 10 additional the second time)
    against the 1200 or so that have petitioned for the special meeting.
    
    It is obvious that the DCU board have interpreted, the let's admit it,
    pathetic turnout at the informal meetings as an indication that the
    vast majority of the membership think everything is hunky dory.
    
    I firmly believe that in order to stand a chance of passing the
    resolutions at the special meeting there will need to be several
    hundred people present willing to vote out the board. I'm convinced
    that at this very moment the board are busily looking for supporters to
    go to the meeting.
    
    I must admit that to start with I was only mildly annoyed with DCU's
    actions. But now that I've seen the brick walls that are being put up
    on information access I'm beginning to suspect that there must be
    another large skeleton in the cupboard.
    
    In order to be successful at the special meeting I hope that there are
    a few interested people who have put together resumes for board
    membership. It's not much use tossing out the present "I love
    doublespeak and everything is rosy and we're spot on for our 0.87%
    profits" lot without being able to show that there are qualified,
    willing and capable candidates that would like to serve on the board.
    
    One suggestion I have for encouraging people to come is for someone to
    post a new note asking those who promise they'll come to the special
    meeting to send a mail message to "xxx". On a regular basis "xxx" would
    publish the number of people that had responded. No of course I'm not
    asking the responders to say how they feel about the issues ie which
    way they'll vote but the purpose is to gain committment to stand behind
    the signature on the 1200 signature petition. If less than 100 people
    turn up to this special meeting it'll be a total embarrassment.
    
    Dave

    
    RE: .55
    
    Dave,  Please remember that the only notice of those "informal
    discussions" was posted in this conference.  No notice at DCU branches. 
    No notice on LiveWire.   And the first meeting was on 36 hours notice. 
    There are still many who do not read this conference or know of its
    existence.  Even more members that just decided they couldn't change
    anything so what the hay.  They either left or stewed, not knowing
    what to do.  The petition drive gave many the outlet they were looking
    for, and had been WAITING for.  The special meeting will be a time
    when 1 vote means a lot. 
    
    As for your other points on the meeting, rest assured we have taken
    into account the fact that the BoD will be rounding up their troops. 
    We have taken appropriate measures on our part.  And then there the
    many that didn't sign the petitions that will be showing up.
    

You might also ask for straw counts of those who would come to the meeting
if they were close enough to the meeting place to attend.   I expect we have
many west (and southwest) of the Mass boarder, and probably North and East also,
who would come even if the time were not the most convenienent.

It could only be a straw count, but it would be interesting.

(Perhaps we should also take a "everything is hunky dory" count while we
are at it??  The whole thing should be able to be automated.



Bill

I'm sure it's been mentioned in here somewhere, but could someone clarify
what the ground rules of the meeting are?  Only those members who show up
get to vote, right?  What's the agenda?  Can non-agenda items be voted on?
Will the NCUA send an observer?  The only restrictions on the meeting's
time and location are that it has to be held within 30 days (of something),
with 7 days' notice to all members, within 100 miles of Parker Street, right?
So they can hold it at midnight in Roxbury?

    According to current interpretations, they can hold it at midnight in
    Roxbury some time in 1995.  They only have to schedule it during the
    next 30 days ...
    
    Steve

    I'd expect a special meeting to be held during business hours, which
    means we'd have to take vacation time to attend.
    
    Wes

    
RE: .58
    >I'm sure it's been mentioned in here somewhere, but could someone clarify
>what the ground rules of the meeting are?  Only those members who show up
>get to vote, right?  
    
    NCUA suggests Robert's Rules of Order. Yes, only those present may
    vote.
    
    >What's the agenda?  
    
    	1. roll back checking to the way it existed Aug. 1st 1991.
    	2. removal of the Board of Directors
    	3. Call for new elections within 90 days.
    
    >Can non-agenda items be voted on?
	NO.
    
    >Will the NCUA send an observer?  
    
    	No. I already asked.
    
    >The only restrictions on the meeting's
>time and location are that it has to be held within 30 days (of something),
>with 7 days' notice to all members, within 100 miles of Parker Street, right?
>So they can hold it at midnight in Roxbury?
    
    	Yes on all counts.
    
    
	RE: .59
    >    According to current interpretations, they can hold it at midnight in
>    Roxbury some time in 1995.  They only have to schedule it during the
>    next 30 days ...
    
    	Current interpretation of the NCUA General Counsel in Washington
    D.C. is that meeting must be HELD in 30 days (by Oct. 17).
    
	RE: .60
    
>    I'd expect a special meeting to be held during business hours, which
>    means we'd have to take vacation time to attend.
    
    	Should this be attempted, it will definitely insult thousands more
    DCU members and may be reason to contact DEC personel and K.O. himself
    concerning the behavior of an organization that is held out as a
    benefit of working here at DEC.  I'm sure the BoD will "Do the right
    thing."

    
    	Re: .61
    
    	Out of curiosity, if the agenda passes as listed, who officially
    runs DCU between the date of the meeting and the date of the new
    elections?  The current Board would have been thrown out and there
    isn't an agenda item to elect an interim board to serve until the real
    elections...
    
    							-craig

Re:  .62

Day to day operations will be unaffected by getting rid of the BoD.  There
are still officers of DCU who run the place...they can get along just fine
short-term without the BoD.

/Chris