Tuesday, February 28, 2023

SECU Board - National Judgment Review - (Strike) #3

 To: SECU Board of Directors

Dear Mr. Ayers,

These national reviews of the SECU Board are not like "fine wine" - they don't seem to improve with age! [Here's the link... chipfilson.com] to part #3 on SECU in Mr. Filson's nationally followed blog on credit unions.

You know there is going to be a "Ripple" effect from all of this...some serious headaches!

SECU Board Judgment - Under National Review #2

 To: SECU Board of Directors

Dear Chairman Ayers, 

As noted in "Judgment - Part 1", folks at the national level are beginning to review the soundness of your decisions and judgment in leading SECU forward - an uplift or downward spiral?  


[Here's the link] to Chip Filson's second part in the series on SECU.  Greater detail on Mr. Filson's credentials and expertise in the area of credit unions can be found in "Judgment - Part #1". Mr. Filson attempts "to analyze the facts" on your "New Culture, New Direction - SECU". Unfortunately your facts are few, but generalities are plentiful. 

The suspicion remains that the SECU Board is either ill-informed or uninformed on these important issues; and therefore, can't provide greater clarity and transparency to the members who have questions. The questions continue to grow, Board responsiveness is not encouraging.

So far, no one - even you and the SECU Board - has questioned the progress which SECU achieved over its first 85 years - in fact, take a look at what you say! [link] SECU History.  Yes, what indeed led you and the SECU Board to order an "about face", when confronted with success? 

Why did you order a turn for the worst?

SECU Board Judgement Now Under National Scrutiny - #1

 To: SECU Board of Directors

Dear Chairman Ayers,

Well Mr. Ayers, the questioning of the soundness of your judgment has now "gone national" within the credit union community! Congratulations! You and the SECU Board wanted a "national presence" for the Credit Union - your wish has been fulfilled!  Hope we all - members, advisory boards, and particularly the staff - can survive the upcoming "black eye" swat to SECU's reputation.

One thing is certain - you might be able to "duck, duck, goose" locally with the membership, but that ain't gonna work under national scrutiny!


Mr. Chip Filson is the retired CEO of the premier credit union "think tank" in the U.S. - Callahan's and Associates. Mr. Filson has not only been an exceptionally successful entrepreneur, but has also served as an Illinois state credit union regulator and as a top senior Federal level administrator at the National Credit Union Administration (NCUA).  

Guess I should also note that Mr. Filson is a Harvard graduate and a Rhodes Scholar - not only that, but president of his class at Harvard and played one-on-one, pick-up basketball at Oxford with Senator Bill Bradley, also a Rhodes Scholar! You get the picture! 

If any of the current SECU Board has a tendency to believe they are brighter than the overall SECU membership; and when meeting anywhere in North Carolina are"the smartest person at the table"...

...you and the SECU Board might prepare to be rudely enlightened - and if you will listen - much better informed.

Mr. Filson's nationally followed blog will be featuring you and SECU for the next few days. Here's the link:

 [link....SECU Board under the spotlight

Wish you well.

Monday, February 27, 2023

The "New SECU" Corporate Selfie?


Hey, move over a bit, I can't see the members anymore!

SECU New Culture - Hey, We're Rebranding - "New SECU"!

 To: SECU Board of Directors


Dear Chairman Ayers,

Thought I'd point out that, if you and the SECU Board, continue to neglect to survey the member-owners of SECU as to their opinion of your proposed changes such as risk-based lending, open membership, regional expansion, commercial lending - and yes it's even not too late on that tax prep mistake - that your haste will make waste and leave a bad taste! 

Speaking of bad taste, a growing number of your members and staff are pretty sure you're making a "NEW COKE MISTAKE"!

Just to refresh your memory, the Coca Cola Company in 1985 rebranded one of the top 3 corporate images in the United States - if not the world - by changing the formula for it's best selling soft drink, Coke. They then launched "New Coke" (and, of course, recruited a hoard of expensive marketeers to run an Ad Campaign!) [Here's the link if you'd like to read  all about it!] Is this starting to sound strangely familiar?

The Board and senior management at Coca-Cola were so smugly certain of their wisdom that they failed in their due diligence. The Board didn't feel it was necessary to ask consumers what they thought. Why bother, right?

 It took less than 90 days for the Coca Cola Board to rescind its disastrous decision - it was an avoidable, costly mistake. Don Keough, the CEO of Coke at the time, said: "When senior leadership made the decision to change the formula, they underestimated the deep psychological attachment people had to Coca-Cola. The SECU Board is making the same mistake - you should stop and ask your member-owners their opinion. Why not check before you mess up the "brand"?
                         In Bad Taste! 

“As an employee, it was an uncomfortable and almost surreal position to be in… it was sort of like we were starring in a bad movie.” 


With your "New SECU" branding, you will probably need a new slogan, catch-line, hook. Why not try:  

"Haste, Waste, Leaves a Bad Taste!" 

 Members will "get it"...


Saturday, February 25, 2023

SECU Board - Employee Intimidation and Coercion - Shame on You # 2

 To: SECU Board of Directors

Dear Chairman Ayers,

Really hate to be rude, but I never believed that you, Mr. Ayers and the SECU Board would stoop this low.  To permit the Chief Executive Officer (COO) of SECU to pressure and intimidate the SECU staff with the memo below crosses all boundaries of ethics and justice.

Really not much left to say to you, Mr. Ayers, other than shame on you, shame on you, shame on you - and also to each member of the SECU Board who has encouraged this new culture at SECU.

FROM Ms. Leigh Brady, COO - Friday, February 24, 2023:

"Good morning and happy Friday!

Our Board has received numerous letters from team members across the state supporting our movement forward with tier based lending. I'd love to have our admin@ ncsecu.org box flooded with similar emails of support for the Board. Feel free to invite your team members to email their messages of support. Please have them direct those emails to admin@ncsecu.org.

Thanks all-


Leigh Brady, CUDE (she/her/hers)

Chief Operating Officer

State Employees' Credit Union

919-807-8347 local | 800-634-8017 toll-free | 919-839-5348 fax

119 N. Salisbury Street | Raleigh, NC 27603"

image.png"Nothing is more despicable, than respect based on fear" Shame on you!

SECU Board - Employee Intmidation, Revised Code of Ethics - Shame on you #1

To SECU Board of Directors


Dear Chairman Ayers.

Really hate to be a bother by being too responsive to the many changes you and the SECU Board are adopting. But, you are jumbling about so frequently that it's been hard to keep up!  Will be brief, because I realize y'all need time to race off in all directions.

The comment today is about the changes in the SECU Code of Ethics which you and the SECU Board approved at your last board meeting in January, 2023. Let's take a look:

Summary of Revisions (dated 2/14/2023)

"As a reminder, acceptance of and adherence to SECU policies is a condition of employment."

"Code of Ethics"
  • "Additional language has been added to further clarify that employees are prohibited from accessing confidential, restricted, or privileged information without a legitimate business purpose. Additionally employees must protect the privacy of individuals' personal information and SECU's proprietary information such as internal communications, system information, training, and procedures."
"As a reminder, acceptance of and adherence to SECU policies is a condition of employment."

The timing of your update is interesting. Not sure what caused it. No problem with the individual privacy and confidentiality "updates", since they both are already explicitly stated in the SECU Bylaws ( see Art. XIX,Sec.2: Confidences) and in N.C. General Statutes! The intriguing part is the new bit about "SECU proprietary information". Where did that come from? Why are you adding that now ?

Are employees now at risk of being fired for sharing a training manual? Sharing information on "procedures" with members?

Just in case - by some rare chance - these "commentaries" have been causing you some discomfort and have led you to adopt these draconian - employee threatening - new policies; I want you to be assured of two things:
  1. SECU has always been a "leaky" organization!  It used to be viewed as a positive thing, since everybody knew what was going on and as a great "internal control" because nobody could get away with anything bad - because everybody knew what was going on!!!
  2. SECU still "leaks"!  But what you really need to know is, SECU is "leaking' at the member level, the employee level, the supervisory level, the senior management level , and at the Board level. Would advise caution with your new policy in an era when everyone has a phone and most everything is either on video or recorded! Sometimes folks don't tell you that, until it's too late.
Simply meant as a word to the wise. With your pursuit of transparency, you probably don't even need to worry about it!

image.pngMentioned the growing concern with the new "Corporate Selfie" image of SECU! Should have pointed out that the first thing you do when you take a "Corporate Selfie" is you turn your back on the members - and in this case, you turn your back on the staff.


Thursday, February 23, 2023

SECU Risk-based Lending # 13


Letter to SECU Board of Directors


From: Mike Lord, 

Retired CEO of SECU


Greetings.  I hope you are well.

Felt you would benefit from the following information as you evaluate the impacts of risk-based lending/interest rate pricing on members.

Below please find 3 links and one PDF to recent articles from Forbes, CNN Business, Wikipedia, and Marketplace/Center for Responsible Lending that discuss some of the flaws and errors in credit scores used in determining the interest rates charged to consumers.  As you know, credit scoring usually prices loan interest rates in four tiers (A, B, C, and D) with “A” credits getting the lowest rates and “D” credits getting the highest rates (significantly higher).  Implementing such a rate pricing scheme will result in making fewer loans at higher interest rates to our existing members, rather than growing the member loan portfolio.  Many members will either not qualify and be denied the loans or, if approved, be less able to afford the high rate and high payment loans. 

Studies reflect that risk-based rate setting will also sustain inherent historical bias against black and latino members and those with little to no credit history (folks just starting out in their careers like new teachers and state employees).  Their interest and loan denial rates will be much higher because of the algorithms used to construct credit scores.   Please read the articles below for more information on these subjects.  The benefits of the Board’s focus on Diversity, Equity and Inclusion will be cast aside in a dramatic way as credit scoring is neither equitable nor inclusive—it’s just the opposite A significant percentage of our members (60% or more?) will end up paying much higher interest rates going forward (even after having paid their existing loans on time for years).  Or they will be denied the loans altogether.

Three years ago SECU provided more than 25% of the total lending needs of a typical member household; today it has shrunk to 15%.  The conclusion that the cause of this is that SECU is not able to attract the “A” credit members is incorrect.  The solution to this legitimate concern is simple and has nothing to do with risk based credit score rate setting.  This can easily be addressed by simply lowering current loan interest rates to attract the “A” member-borrowers.  Doing so would result in higher loan volumes while continuing to benefit all member-borrowers.  Moreover, the drop in market share and volume was primarily caused by other factors.  The most significant factor was the gigantic rise in Fintech lending which has taken market share from all banks and credit unions in both the consumer and mortgage areas.  Wall Street Banks and others backed by hedge fund and other institutional money got into the lending business in a big way.  Additionally, the huge influx of federal COVID stimulus money coupled with the large income tax breaks of 2020 and 2021 (increased child care tax credits, higher exemption thresholds, etc.) allowed many members to reduce borrowing and live off the funds provided by the government.  Despite these factors, however, our mortgage loan activity reached a record volume of 15,000 loans in process at the apex of demand in 2021—this volume dwarfed all prior loan origination records.  Our member loan portfolio grew dramatically, even throughout the pandemic, despite these competitive and economic forces.  As interest rates shot up over the past year the volume has now dropped to 5,000 loans in process (but the portfolio continues to grow albeit at a slower pace).  Attractive rates, fair products and convenient, responsive, friendly and informed service will continue to grow the portfolio.

Earnings are strong, loan losses are low, Allowance for Loan Loss reserves are high, and increased loan volumes will earn enough income to easily handle an increase in losses into the future.  All members will benefit from lower loan interest rates and higher deposit rates.  No select group needs to bear the weight of substantially higher loan interest rates to make this happen—this is exactly why SECU started in 1937–state teachers and employees pooled their savings and lent them to one another at the same rates to provide access to affordable credit for all (because banks either wouldn’t lend to them or offered only usuriously high interest rates for those at the lower end of the economic scale).  This is one of the differences that set us apart from the banks.  One we have a long history of being proud of.

This matter is very important to our members—particularly the vast majority who will end up being charged higher loan interest rates.  Damage will be done to our reputation of always looking after our members.  We have an opportunity to help our members by continuing our history of sharing the benefits of membership with all of them.  We have always strived to “Do the Right Thing” by our members by not employing risk based credit scoring in setting loan interest rates.  It was, and remains, the right thing to do.  You can continue to make life-altering differences in members lives by offering fair, equitable and low-priced products to all.  

Thank you for your attention to this matter.  Please share with the Board member for whom I have no email address.

——Mike Lord


Here are the articles for your reference (3 links and one PDF):

Wikipedia on Credit Scoring System:

Credit scoring systems in the United States have garnered considerable criticism from various media outlets, consumer law organizations,[1] government officials,[2] debtorsunions,[3][4] and academics. Racial bias,[5] discrimination against prospective employees,[6] discrimination against medical and student debt holders,[7] poor riskpredictability, manipulation of credit scoring algorithms,[8] inaccurate reports,[9] and overall immorality are some of the concerns raised regarding the system. 

Forbes Advisor (February 21, 2021):  “From Inherent Racial Bias to Incorrect Data—The Problems With Current Credit Scoring Models”

CNN Business (August 3, 2022):  Equifax Issued Wrong Credit Scores for Millions of Consumers”


Marketplace & Center for Responsible Lending (August 2022):  Credit Scores and the Bias Behind Them”