Lafayette Federal Credit Union
Encyclopedia
Lafayette Federal Credit Union (LFCU) is a federally chartered credit union
headquartered in Kensington, Maryland
, regulated under the authority of the National Credit Union Administration
(NCUA). As of 2008, LFCU had $318 million in assets, approximately 14,000 members, and 5 branches.
Eligibility for membership is extended to anyone who lives or works in Potomac, Maryland
or Washington, D.C.
as well as members of select employee groups. Member deposits up to $250,000 in LFCU are insured through the National Credit Union Share Insurance Fund
.
LFCU was founded in 1935 and sponsors an annual charity golf tournament to benefit the Capital Area Food Bank
.
to convert to a mutual savings bank
. The credit union claimed it needed to convert to a bank to gain customers, an assertion challenged by the National Credit Union Administration. LFCU's lack of full disclosure angered its membership and prompted Congressman
Chris Van Hollen
(D
-MD
) and Congressional Delegate Eleanor Holmes Norton
of Washington, D.C. to raise concerns about unjust insider enrichment. Prior to a December vote on the conversion, members collected signatures for a petition to oust the credit union's Board of Directors. The membership voted in favor of the conversion by a margin of 18 votes out of more than 5000 votes cast. Members charged LFCU with misleading the membership in its disclosures about the conversion and the voting process. They also alleged that the credit union had violated NCUA regulations on independent balloting. Days later the Board withdrew its petition to become a bank, saying the balloting process was compromised and blaming the accounting firm RSM McGladrey, who initially certified that the process was conducted fairly. After questions were raised by the NCUA, the firm reassessed the vote and withdrew its certification. LFCU Board Chairman Arnold S. Rosenthal indicated that errors in tabulation of the vote included "miscounted ballots, acceptance of multiple ballots from individuals, [and] multiple and mismatched versions of the vote tally." Rosenthal utilized LFCU's website to criticize the membership for fighting the conversion and led the Board of Directors to sue William A. Brooks, a former President of LFCU who spoke out against the conversion. After members gathered enough signatures to force a recall of the Board of Directors, the Board changed the bylaws to require that voting be done in person. The credit union also barred Scott Stiens, head of the petition drive, from using his accounts. Michael Hearne, CEO of LFCU during the conversion, was replaced in August 2007.
Credit union
A credit union is a cooperative financial institution that is owned and controlled by its members and operated for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to its members...
headquartered in Kensington, Maryland
Kensington, Maryland
Kensington is a town in Montgomery County, Maryland, United States. The population was 1,873 at the 2000 census. Greater Kensington encompasses the entire 20895 zip code and its population is an order of magnitude larger than that of the town at its center....
, regulated under the authority of the National Credit Union Administration
National Credit Union Administration
The National Credit Union Administration is the United States independent federal agency that supervises and charters federal credit unions...
(NCUA). As of 2008, LFCU had $318 million in assets, approximately 14,000 members, and 5 branches.
Eligibility for membership is extended to anyone who lives or works in Potomac, Maryland
Potomac, Maryland
Potomac is a census-designated place in Montgomery County, Maryland, United States, named for the nearby Potomac River. The population was 44,822 at the 2000 census. The Potomac area is known for its very affluent and highly-educated residents. In 2009 CNNMoney.com listed Potomac as the fourth...
or Washington, D.C.
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....
as well as members of select employee groups. Member deposits up to $250,000 in LFCU are insured through the National Credit Union Share Insurance Fund
National Credit Union Share Insurance Fund
The National Credit Union Share Insurance Fund is administered by the National Credit Union Administration for the purpose of providing deposit insurance to protect deposits of credit union members at insured institutions in the United States. It was created in 1970 shortly after the creation of...
.
LFCU was founded in 1935 and sponsors an annual charity golf tournament to benefit the Capital Area Food Bank
Capital Area Food Bank
The Capital Area Food Bank is the largest non-profit food bank in the Washington, D.C. area and a member of America's Second Harvest. In addition to serving the area with food, it also provides nutritional education to the local community. As a result, Washingtonian magazine named it one of the...
.
Failed conversion attempt
In June 2006, Lafayette Federal Credit Union filed with the Office of Thrift SupervisionOffice of Thrift Supervision
The Office of Thrift Supervision was a United States federal agency under the Department of the Treasury that charters, supervises, and regulates all federally- and state-chartered savings banks and savings and loans associations. It was created in 1989 as a renamed version of another federal agency...
to convert to a mutual savings bank
Mutual savings bank
A mutual savings bank is a financial institution chartered by a central or regional government, without capital stock, that is owned by its members who subscribe to a common fund. From this fund claims, loans, etc., are paid. Profits after deductions are shared between the members...
. The credit union claimed it needed to convert to a bank to gain customers, an assertion challenged by the National Credit Union Administration. LFCU's lack of full disclosure angered its membership and prompted Congressman
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...
Chris Van Hollen
Chris Van Hollen
Christopher "Chris" Van Hollen, Jr. is the U.S. Representative for , serving since 2003. He is a member of the Democratic Party...
(D
Democratic Party (United States)
The Democratic Party is one of two major contemporary political parties in the United States, along with the Republican Party. The party's socially liberal and progressive platform is largely considered center-left in the U.S. political spectrum. The party has the lengthiest record of continuous...
-MD
Maryland
Maryland is a U.S. state located in the Mid Atlantic region of the United States, bordering Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware to its east...
) and Congressional Delegate Eleanor Holmes Norton
Eleanor Holmes Norton
Eleanor Holmes Norton is a Delegate to Congress representing the District of Columbia. In her position she is able to serve on and vote with committees, as well as speak from the House floor...
of Washington, D.C. to raise concerns about unjust insider enrichment. Prior to a December vote on the conversion, members collected signatures for a petition to oust the credit union's Board of Directors. The membership voted in favor of the conversion by a margin of 18 votes out of more than 5000 votes cast. Members charged LFCU with misleading the membership in its disclosures about the conversion and the voting process. They also alleged that the credit union had violated NCUA regulations on independent balloting. Days later the Board withdrew its petition to become a bank, saying the balloting process was compromised and blaming the accounting firm RSM McGladrey, who initially certified that the process was conducted fairly. After questions were raised by the NCUA, the firm reassessed the vote and withdrew its certification. LFCU Board Chairman Arnold S. Rosenthal indicated that errors in tabulation of the vote included "miscounted ballots, acceptance of multiple ballots from individuals, [and] multiple and mismatched versions of the vote tally." Rosenthal utilized LFCU's website to criticize the membership for fighting the conversion and led the Board of Directors to sue William A. Brooks, a former President of LFCU who spoke out against the conversion. After members gathered enough signatures to force a recall of the Board of Directors, the Board changed the bylaws to require that voting be done in person. The credit union also barred Scott Stiens, head of the petition drive, from using his accounts. Michael Hearne, CEO of LFCU during the conversion, was replaced in August 2007.