Thursday, February 23, 2023

SECU - Risk-Based Lending # 12 : "The 91% Solution"

Dear Chairman Ayers,

Hey, what's happening? Awfully quiet over there! Couldn't you give your 2.7 million fellow members at least a hint about what you decided about risk-based lending (RBL), maybe on Instagram? Noticed yesterday that you found time to post a pet video. SEANC had asked about a "pause control", but instead got Paw Patrol? Your SECU Ad Campaign is definitely a woofer wonder!

Take a look at the group below. Don't worry, didn't get the pix off the wall at the Post Office. This is just a group of arbitrarily selected SECU members, which we're going to use to demonstrate the injustice to all SECU members - including you! - of risk-based lending. Hope you won't take this too personally; well, actually I do...

Chris Ayers ImageAlice GarlandMcKinley Wooten, Jr. Image

image.pngimage.pngimage.pngimage.png     image.pngimage.pngBob BrinsonMona Moon

For the demonstration, we're going to create another arbitrary RBL tier to add to your proposed SECU risk-based lending program.  You currently have 5 tiers - A/B/C/D/E. Well, actually you already have at least 10 tiers, since you've recently decided to provide all employees with a 1% discount on their loans. Since not all employees are "A" paper, that would mean you have arbitrarily added the following tiers - A "-1%", B "-1%", C "-1%" etc. Just decided to unilaterally make 'em right up! Could a "Board tier" be next?

Now, the folks in this new RBL group - you, the SECU Board - are all astute, successful, and superior folks (let's call you the "A+" tier!). But, let's assume that all of you have had the recent misfortune of suffering a personal, real life family tragedy - death, serious car accident, loss of job, divorce, medical emergency for a child, teen on drugs, bad gambling habit, issues with alcohol. 
In the midst of the family crisis, confusion, and heartbreak, you simply forgot - family was first on your minds! - to make your payments for 30 days and your credit score plunged into the "E" paper tier (see RBL # 6  for how easy it is to trash your credit score). Unlike the SECU RBL program, real life does not discriminate against folks - even the astute, successful, and superiors often get whacked and blind-sided.

So, let's add to the demonstration by stating that one of you - now "E" paper folks - is also going to default on his/her used car loan at SECU - hey, stuff happens! Can you pick out which one of you will default? Hint: it's not the duck (...he can't become a member until the SECU Board approves "anyone can join"). The answer of course is no you can't identify the culprit!. As you've been told many times, although a credit score can arbitrarily put you in a high default tier - despite honest, real life problems - the credit score companies keep warning you, the score can't tell you which individual in the tier will default.

So how have you - the SECU Board with astute, successful, and superior wisdom - decided to handle this situation? Well, take a look at the proposed SECU RBL rate chart below:


You'll remember that each of you now "E" paper tier folks - regardless of your real life "excuses" - will have to pay $2250 extra for your next used car loan. So, Mr. Ayers, Ms. Garland, Mr. Wooten, Ms. Moon, Ms. Sanford, Mr. Parrish, Mr. Brinson, Mr. Fleming, Ms. Williams, Ms. Haywood, Mr. Mclawhorn, do you feel it's reasonable and fair for you to pay an extra $2250 each because one of your fellow SECU Board members defaulted? ...even though ten out of  11 of you on the SECU Board - that's 91% of you! - fully and faithfully met your loan obligation? Answer honestly now, no "ducking" okay?

And, by the way, why would you overcharge each other $24,750 (11 borrowers X the $2250 surcharge = $24,750 extra!) to cover one $18,000 default on a used car loan - even that doesn't add up, does it?

image.png With RBL, is it that as a Board, you simply don't understand...or is it that you simply don't care? 
2.7 million member-owners of SECU would like to know your honest answer.

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