SECU Board Elections - 2023: Back To "There Is A Difference" For The Country To See...

   Cliff Rosenthal

This is What Credit Union Democracy Looks Like

This afternoon, my daily routine was disrupted in a good way by the annual meeting of North Carolina’s State Employees Credit Union (SECU), the  $50-billion, 2.7 million member, 85-year old credit union that is the nation’s second largest.

I became a cooperative idealist in the 1970s, first as a food co-op organizer until I was introduced to credit unions when I was charged with organizing one for the farm worker nonprofit I worked for.. . . I was enthralled with credit unions as democratic, egalitarian institutions, created to empower individuals excluded from the for-profit banking system.

I was fortunate enough to be hired by the National Federation of Community Development Credit Unions (rebranded as Inclusiv after I left), becoming CEO in 1983 and serving for nearly 30 years. . .

Over the years , , , I went to my share of annual meetings of our member credit unions, usually not very well attended (except if there were refreshments). It was great to meet members, and it was my job, but truth be told, it was not the liveliest way to spend an evening or weekend afternoon.  

My Life’s Work

The 90-minutes I spent watching SECU’s annual meeting on YouTube reminded me why credit unions became my life work. One after another, SECU members debated recent changes instituted by the board,  most controversially, the introduction of risk-based pricing—the nearly universal practice of U.S. credit unions which  charge members different rates according to the credit score-informed tier they fell into.

Not SECU. For nearly its entire history, it offered the same price for the same loan product for all members.  It was a simple, time-honored, financially successful practice, that fueled SECU’s steady growth. . .

But for some members and the credit union’s recent leadership, that was not good enough. Several speakers argued that the credit union’s savings rates were not competitive; one spoke of his children leaving SECU for better rates at a bank. How would the credit union grow and—well, compete—if it didn’t raise savings rates to retain members? . . .

Speaker after speaker—members of 30 years, 40 years, 50 years—spoke passionately about what SECU had meant to them and others, a place to get the best possible rate even when they were starting out in life, were struggling financially, or had marred credit.

True, risk-based pricing was everywhere in credit unions today—but for those with long memories, it had not always been so. They fully understood that better returns on savings were available elsewhere. But they were staying.

One-tier pricing is radically egalitarian—providing those with fewer financial means the same rates enjoyed by those with immaculate credit scores and ample resources. Except it is hardly radical, and hardly new.

One speaker denounced the strategy as “socialist”: This was North Carolina, he argued, not Russia, China, or Cuba. But I heard no “woke” or progressive rhetoric, only the testimony of people who cared deeply about their fellow North Carolinians and wanted to help them better their lives. “People helping people”—not simply a brand slogan, but an expression of human solidarity.

I spent my career working with small, community-based institutions. As the credit union “movement” became the credit union “industry,” with assets and membership disproportionately concentrated in a minority of institutions, I reluctantly concluded that my ideals and passion were nothing more than a relic.

Today, I thank the members of SECU for the inspiration and hope they gave me.

© Clifford N. Rosenthal