Monday, February 20, 2023

SECU Risk-based Lending # 9

 To: SECU Board of Directors


Dear Chairman Ayers,

Ready for the weekend? Yep, me too; actually very excited about it. If all goes well, will tell you about it on Monday!

Need to get back to why you and the SECU Board are directly discriminating against the members of SECU with risk-based lending (RBL). Do you still plan to implement RBL on March 1, 2023 as announced to the staff? Y'know that's just two weeks away! Have I missed the notification and information you and the SECU Board have sent out to the membership about this change? Or are y'all planning another little surprise party?

We talked (see RBL # 7) about how risk-based lending will end up discriminating against young, black, and female SECU members, who on average have lower credit scores than older, white, and male SECU members. Those average lower scores simply mean that those folks on average will more frequently fall into lower credit tiers and will be charged higher rates on their loans by you and the SECU Board. Hey, it's not rocket science, that's just the way fourth grade arithmetic works. 'Course with arbitrarily set credit tiers "1 + 1 = ?" ...can be whatever you and the SECU Board want it to be. Such power should be used wisely - don't you think?

But another highly discriminatory effect of RBL is that SECU members in Tier 1 & Tier 2 counties (you know the ones you're claiming to be so concerned about!) will also pay more for their loans on average! How so?  Well, hope it comes as no surprise to you and the SECU Board that people with higher median incomes, also on average have higher credit scores. Why? Because they have more money! And, have more flexibility in their budgets and are less financially stressed out when an unexpected - real life! - problem arises.

With many SECU members, when the family car breaks down, it's a little bit more of a problem than just speed dialing "Triple A"!. Also, lot's of "not yet affluent" folks don't start out with a whole lot, don't have a rich uncle in the family "to help out", and then there are those student loans! "Not having a lot" doesn't mean someone is a lesser person, nor should they be treated with less dignity and respect -  or an unequal, punitive interest rate - by SECU. The successful history of SECU shows that "average folks" may indeed miss a payment from time to time and get behind - and in doing so trash their credit score (see RBL # 6) - but do have a tremendous record of honoring their loan commitments to SECU.

North Carolina_County_Map_Region.gif

So, let's take a look at some family income stats across North Carolina and try to guess where the SECU Board-approved RBL program will hurt folks the most:
  • The median household income in all of North Carolina is $61,972.
  • The median salary of a North Carolina state employee is $50,922. 
  • The average salary of a North Carolina teacher is $54,324.
And, around the State:
  • The median household income in Wake County is $91,299.
  • The median household income in Burke County is $55,529.
  • The median household income in Wilkes County is $43,933.
  • The median household income in Caldwell County is $41,210.
  • The median household income in Wayne County is $47,595.
  • The median household income in Robeson County is $37,008.
  • The median household income in Rockingham County is $42,901
Here's the link if you want to check your county out - scroll down it's on the right...[link]

Risk-based lending on average will have a substantial, highly adverse financial impact on SECU members living in the lower median income counties in North Carolina - again, simple arithmetic! Count on it!

Probably not polite to bring this up, but is it just coincidental that this new risk-based lending program is being pushed by SECU Board members, who all appear to belong to "The $100,000+, Doin' Right Well Income Club" and all live in the wealthiest county (Wake County at $91,299) in North Carolina? Just wondering if they've wandered out into the provinces,  any time lately? And y'know, rubbed elbows with some non "A" folks?

image.pngKnow that diversity is paramount; but race, gender, and whatever aside, let's not duck the question: "Does the current SECU Board really reflect the diversity of the SECU membership?" Just simple economic fairness, right?

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