To: SECU Board of Directors
Dear Chairman Ayers,
Fraud is an interesting word. Think we all know what it means, but just for a refresher: Fraud - wrongful or criminal deception intended to result in financial or personal gain. Pretty clear, right? Are we all together on what fraud means?
Good, let's take a look at fraud in connection with risk-based lending at SECU and how it affects the SECU membership - you and me.
1) When a loan officer makes a loan at the Credit Union - whether it is in the A, B, C, D, or E risk-based lending tier - that loan officer expects that loan to be repaid. If a loan officer makes a loan which she doesn't believe will be repaid, then that loan officer is committing fraud. Easy enough, right? If you make a loan that you believe will not be repaid, you are committing fraud against SECU and its' members. SECU loan officers in the past had a sterling reputation for intelligent, sound lending. How do you know? Because overall loan losses have historically been less than 1/2 of 1%. An excellent performance.
2) So therefore, every loan made at SECU is a good loan when made by the loan officer. Every loan is expected to be repaid, that includes every A, B, C, D, and E loan made. But as Mr. Spencer Scarboro, SVP of Lending Integrity, so clearly states in an SECU press release (!) about lending: "Bad things do happen to good people". Yes, over the years, "bad things" did happen to @ 1/2% of SECU borrowers. SECU members have an exceptional record of repaying their loans as promised!
3) Despite the fact that every loan is good when made - or else the loan officer committed fraud - Chairman Ayers and the SECU Board have decided, by implementing risk-based lending, to overcharge 50+% of all SECU borrowers (in the B, C, D, E risk tiers, according to the SECU SVP of Lending Integrity) without cause for that good loan they just made. This unjustified, profiling of over 50+ % of SECU members - without cause - for a good loan is purposeful, reckless discrimination.
4) To make it clear why overcharging over half of all SECU members borders on fraud, lets' look at an example. Loan losses at most financial institutions are highest on unsecured loans and credit cards. So, lets assume that 1 out of 10 SECU "E"- paper borrowers default on their unsecured loan. That's a very high 10% default rate! 1 out of 10 of those "E" borrowers did not repay - and yes, that's bad. But, what is far worse is that Mr. Ayers and the SECU Board fully support overcharging without justification the innocent 9 out of 10 SECU members who faithfully did repay those "E"- paper unsecured loans.
5) All the credit bureaus explicitly tell lenders - including Chris Ayers and the SECU Board - that credit scores can not and do not predict which individual borrowers will default on a loan.
6) If you and I - and potentially 2.7 million other North Carolinians - were being incorrectly overcharged 90% of the time at the grocery store, at the gas station, at Walmart, Target, Lowe's, Cracker Barrel or Bojangles, we would be screaming FRAUD!...and we would be right in our outrage!
Why do the same rules of fairness no longer apply at SECU?
I don’t see how they can possibly make a counter argument and justify their reasonings any longer. Jim and the BOD will fall and we will be left to pick up the pieces, but this could be a good lesson for secu if we can make it through the current corrup admin and BOD…Never compromise your values and always do the right thing. That’s what SECU has always been.
ReplyDeleteI believe it was Mr. Spock who so eloquently said, "The needs of the many outweigh the needs of the few (BOD)...or the one (Gym Haze)".
ReplyDeleteIt's time for the members to speak up and reclaim THEIR credit union. They Deserve Better.
#GiveUsOurTiesBack
I love the message, but let’s please not actually bring the ties back lol
DeleteRisk-based Lending (RBL) … SAY-WHAT?
ReplyDeleteWe can find many significant stories from 1937.
Such as … Amelia Earhart – Hindenburg –
Howard Hughes – Golden Gate Bridge –
Ohio River – Roosevelt – Recession – much more...
One of the most impactful …
CREDIT UNION FORMED
BY STATE EMPLOYEES
The State Employees’ Credit Union, a mutual savings and loan association for the exclusive benefit of State employees was organized last night under the supervision of the Department of Agriculture’s Credit Union division. Officers elected were Chester O. Bell, president; J. T. Armstrong, vice president; W. W. Jones, treasurer and C. P. Deyton, secretary. Directors: J. T. Armstrong, Edward Cothran, G. H. Arnold, Chester Bell, E. W. Price, Dr. J. C. Knox, W. W. Jones, C. P. Deyton, Dr. C. C. Crittenden, John C. Root, and R. P. Pierce.
(Article found in the News and Observer Saturday, June 5, 1937.)
Risk-based Lending (RBL) did not exist
in 1937 -thank God- … but it would be
interesting to go back in time
and ask the original Officers and Directors
of the Credit Union, what they
thought about risk-based lending (RBL).
Would SECU exist today?
My confidence is high that this conversation
would have never happened even if Risk-based
Lending (RBL) did exist but imagine the what-if
discussion took place with the initial 17 members….
Chester O Bell, president, talking points to original members.
… “Thank you for your hard-earned deposits of $437.”
… “FYI members, you all won’t get the same rate when you need a loan.”
… “We have Risk-based Lending (RBL) to make those decisions.”
… “Good luck.”
17 (members) State employees’ responses
… “WHAT ARE YOU TALKING ABOUT?”
… “OUR MONEY, RIGHT?”
… “WHAT RATE DO YOU…YOU… GET??”
… “RISK-BASED LENDING (RBL).
… “SAY-WHAT???”
Let’s not forget all the members, who we are, where we came from, and how we got here. Let’s keep building on the strong-fair-positive service history of the Credit Union and eliminate Risk-based Lending (RBL).
Let your current SECU Officers and Directors know
what you think?
It used to feel great being able to help members, now I feel like a rip off when processing a car loan. I literally dread hitting the rate button.
ReplyDelete100% how I feel!!!
DeleteRight…. Giving them an auto loan at 11.5% and then saying congrats on your purchase! Sick!
Delete