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.

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Do LGFCU Members Want To Continue To Have Access to 275 Brances in Their Hometowns?


     Of course not! *

LGFCU members have always complained about having access to local branches.

Just ask them!


FAQ (from the LGFCU website)

 * Will a Separation mean I won't have access to branches anymore?

As an independent Credit Union, we do not plan to offer the traditional branch experience. Though we know some members have grown accustomed to in-person services, for many of our members, getting to a branch has been more difficult. We believe this shift will allow us to provide the same quality service you have come to expect from LGFCU, just in a different way. We are assessing what our continued engagement with our members will look like.

Because we created Civic Federal Credit Union, we have updated our technology infrastructure, which allows us to process daily transactions. This means we can serve members on our own and provide the same level of service you are familiar with at the branches. This also means that we won't have the overhead costs of supporting brick and mortar buildings. This savings will enable LGFCU to offer better rates for share accounts and loan products. 

* Is this separation a result of the recent changes in leadership at SECU and LGFCU?

No. When the LGFCU-SECU partnership agreement was signed in 1983, the intention was for both credit unions to work collaboratively to allow local government employees access to their credit union.

The agreement was never supposed to last a lifetime. This long-term credit union partnership is unprecedented in the industry and was created with a plan for eventual separation once LGFCU achieved certain growth goals. We have successfully exceeded these growth goals to become a $3.7 billion Credit Union with nearly 400,000 members. We believe now is the time for our independence.

The separation will enable both credit unions to focus on their respective memberships.

Most importantly, we want to ensure that the local government community continues to have its own Credit Union, one that is dedicated to meeting the unique needs of our public servants. We continue to be inspired by our local government members, and it truly is an honor for us to serve those who serve North Carolina so well.

 *Do members have a voice in the separation?

 While we welcome member feedback at, no official member vote will be taken.


* Might want to "fact check" the comments highlighted in yellow....