Two-Martini Legal Advice: Asking The N.C Credit Union Division To Avoid Switches In Its X-Mas Stocking...

 

 

to:		"Ray, Kristina W" <kristina.ray@nccud.nc.gov>
cc:		"Badwan, Rana" <rbadwan@ncdoj.gov>, Jamie Applequist <japlquist6@gmail.com>, Amy Woody <AmyWoody@mountaincu.org>, "to: Roger Montes" <Roger@latinoccu.org>, Caleb Malcolm <calebamalcolm@gmail.com>, dillondoc@gmail.com, Fay Aand bill boyd <fayboyd@embarqmail.com>, Lafayette Jones <lafayettegjones@gmail.com>

Dear Ms. Ray,

Happy Holidays! Took your advice and asked legal counsel for a review of our correspondence, over the last 6 months. As with most extended families, it's not too difficult to find a lawyer somewhere up the family tree willing to share an opinion - when, of course, paid an appropriate retainer. In this case, the hourly rate was two martinis, comfortable chair, roaring fireplace on a cold and rainy afternoon. 

Legal counsel said it was entirely appropriate for a consumer to ask a State regulator about her authority under N.C. State law. He pointed out the "Consumer Questions" section on the NCCUD website [here's the link] as a clear indicator of your responsibility and past willingness to respond to N.C. consumers; let alone the whole website heading: "Consumers" [here's the link], which includes "Consumer Information, Consumer Resources, Consumer Questions, File a Complaint". He also noted that on the website you were officially designated by NCCUD as the "go to person" [see link, at bottom] on any review of credit union rules and regulations. Lastly, he said it was unclear why you would refuse further clarification of the prior request, since responding to a consumer was clearly not an issue - as Administrator you have already crossed that bridge with our prior correspondence. 

 

The following alternatives were proposed:

1. Politely re-request that the prior response to the two questions be clarified and state that a legal opinion is not being requested.
   
2. Appeal the latest response to the Credit Union Commission.
3. Ask a state-chartered credit union, as a courtesy, to file the 2 questions with the Administrator.
4. Ask your N.C. State Representative (or any Representative) to file a request for answers to the 2 questions with the Administrator. Responses are generally mandatory.
   
5. Ask your State Senator (or any Senator) to file a request for answers to the 2 questions with the Administrator. Responses are generally mandatory.
6. Ask members from all across the State to also request that their Representative/Senator write the Administrator requesting an answer to the 2 questions. The more the merrier.
   
7. Request through the Legislature that the Administrator be required to appear before any future hearing on H. 410  to answer these 2 questions and any others surrounding the role of NCCUD in the approval and monitoring of bylaw amendments.
8. Encourage consumers/credit union members to attend the next Credit Union Commission Meeting (Spring 2024 Meeting coming up) to publicly comment on these 2 questions and other issues concerning the supervision of credit unions by the Administrator. Again, the more the merrier.
   
9. File a formal complaint.
10. All of the above.

 Thought all that was a fairly good two-martini investment. And, we can do any or all the above if you feel that is the way this must proceed.

Our strong preference however is #1. So our formal request is: Would you please clarify your prior (October 19, 2023) response to the 2 questions below. We are not requesting a legal opinion and understand you can not provide legal advice.

✔  Q: 1)  Is the N.C. Credit Union Division required by North Carolina law to monitor and enforce compliance by state-chartered credit unions with their bylaws?

✔ Q: 2)  May a N.C. state-chartered credit union adopt rules, policies and procedures which effectively amend its bylaws without approval by the NCCUD? 

 

Thank you. We look forward to your prompt response .

 

Jean and Jim Blaine

December 5, 2023 

 

... sure know what I'd do... the right thing!

SECU - Try To Keep Your Eye On The Ball...

  

Well, what did you think about yesterday's ping pong commentary? Yeah, me too! Sorry about all that, but it's an easy way to take a day off from blogging ! 

The tit-for-tat can be amusing for a while, but everyone grows weary pretty quickly. Hate to say this but, "commentary discussions " (yes, include me in that!) are generally highly superficial - as in defining digital banking to be "applying for a loan on line 7x24 with an instant answer", implying that the members are somehow the root cause of the escalation in SECU loan losses and delinquency, or the painfully obvious, limited (or lack!) of understanding of existing Credit Union services and how they work - and why they are beginning to fall apart now. But as they say, lets look for the pony under the commentary detritus!

✅ Digital banking, on-line loan application - let's not beat this dead pony anymore! No one disagrees that whatever makes SECU services "quicker, better, cheaper" for the members is a good thing. It's a false argument, no "high ground" to be had with this one by any faction. But keep your eye on the ball! So far, the much-hyped, oft promised digital revolution is just "commentary" - with little substance, as yet. SECU continues to function very well using those tech features like on-line access, mobile, ATMs, text,  debit/credit card, ACH, direct deposit which have long been installed - as opposed to the yet to be seen "digital vaporware" (mainly gas!)

✅ Risk-based lending - another dead pony not to re-flog at this time, but take note (since you haven't been notified) of the acknowledged elimination or severe restrictions in loan services ( see December 2, 2023 at 10:26 AM) which have now been imposed on certain "classes" of SECU members based on their credit scores. This is the natural progression of all discriminatory systems - demean, punish financially, make them sit in the back of the bus - and now don't let them on the bus at all.

✅ Clueless on the SECU "Business Model" - this one is perhaps the scariest "commentary insight" of all. This revolves around the apparent lack of understanding, of the core business value, "market advantage", and actual raison-d'etre for "the business" called SECU. For a business to exist, it has to provide value to the consumer in some special, significant way. That way in the past has been fair rates, low fees, exceptional delivery of services with local decisions, from SECU leaders (and lenders) in the local community. It worked extremely well for 85 years - can't deny those financial facts. Local, individualized member service - controlled by the branches - has been the successful SECU model. The "new digital model" is creating "a commodity institution" with no distinct advantage - just striving for "market rates" and impersonal "digital sameness". "Industry standard" is the death knell for SECU - no demonstrable competitive advantage ! Look around at the consolidation in all business sectors - the "really big guys" win "the just like everybody else" competitive wars.  No amount of "We are" pablum or an occaisonal SuperBowl ad will alter that outcome!

✅ An equal fear: the SECU branch staff "don't get it" or "don't care" anymore? - To me the most discouraging "commentary insight" is the one below - with the emphasis on several "attitude markers". Hate to point this out, but under the local, you're responsible and accountable branch model - why are you making bad loans to members which become "a huge burden" for you to collect? Why are employees now finding it unreasonable to be "expected to serve", "plus answer the phone"? Why are you there?

 "AnonymousDecember 2, 2023 at 10:52 PM

As you know, it's not just defaulting/charge offs that come into play. It's also the considerable collection efforts for (mostly) lower-tiered borrowers. This is a full-time job for branch staff and in busier districts like mine it is a huge burden for the staff since we were also expected to serve the 60-90 member we had a day on the loan side plus answer phones. In many cases we were calling and sending letters every single month to the same borrowers, essentially having to babysit them so they would pay their loans. (I don't use that word to disparage the members, but really that's what it was.)

Raleigh severely underestimated how much effort it took to keep our charge off ratio as low as it has been when they tried to centralize collections. This, I think, was a big part of why the centralization was not very successful It's also a very important missing piece to the case you're presenting here. Those collection efforts cost A LOT of time and money (in terms of staff salary).

Is it not the case that the higher rates under RBL for lower tier members would help offset this?"

 

  ... if that's where we really are and where the SECU Board is heading; hey lets fold up the tents now, the train wreck is not a question of if... only a matter of when.