Saturday, February 18, 2023

SECU Risk-based Lending # 7

 To: SECU Board of Directors


Dear Chairman Ayers,

Hate to bother you and the SECU Board on a weekend, but thought you'd like a little heads-up on what's coming your way next week. This is kind of "a pregame highlight", much like all that fanfare leading up to the Super Bowl! As an aside, still a little bit irked by some mischievous folks trying to fool me into believing you and the SECU Board will be spending member "megabucks" on Super Bowl ads. Told them it wasn't going to happen, no way. You and the SECU Board wouldn't waste the members' money on fluff. Hope my faith in you is not proved wrong!

RBL #6 showed you clearly how being just 30 days late on a payment can destroy a member's credit score. By using credit scores to price member loans, Chairman Ayers, you and the SECU Board are putting all members at substantial financial risk for a simple - often well-justified - oversight, which adds no financial risk to SECU. (How do you think a member's late payment hurts SECU - it doesn't!) Also, of serious concern is with risk-based pricing, you and the SECU Board have told the lending staff to take a hike - as even reasonable, justified exceptions will not be permitted.  Is  that why you and the SECU Board chose last year to eliminate all Loan Review Committees - where SECU members could appeal adverse loan officer decisions to a volunteer group of fellow members!. Fairness used to be the #1 concern at SECU in lending - are you listening? [link]

But here are a few highlights of what's in store next week:

* Average credit score:
703 ("B" paper)    (see  RBL # 4 for SECU's credit score tiers)

* By age:
Average credit score for folks in 20's: 660 ("C" paper)
Average credit score for folks in 70's: 754 ("A" paper)

*By race:
Average score black folks : 677  ("B" paper)
Average score white folks:  734  ("A" paper)

*By gender:
Average score female: 708 ("B" paper)
Average score male:    720 ("A" paper)

Chairman Ayers, "the losers" (hope that's not how you think of any member!) under the risk-based lending system which you and the SECU Board have approved are going to be : the young, the black, the female members. Is that what you meant to do?

And, of course if the young and the black and the females are going to lose on average under RBL, that would imply that the old, the white, and the males are going to win...figures (like credit scores) don't lie, right?

image.pngWell now, while I appreciate you trying to favor "old white males" like me (certainly don't want to appear to be ungrateful)...but, I'd really be much happier if you treated everyone equally, isn't that what SECU is all about?

Hey relax, enjoy the game! Talk to you next week.

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