Thursday, July 27, 2023

SECU "This Board" - Didn't Follow State Law On Financial Statements - Why Bother Following The SECU Bylaws?


✅ Mentioned that a couple of us went by this week to meet with Ms. Kristina Ray, the newly appointed Administrator of North Carolina credit unions, and Ms. Rana Badwan, from the Attorney General's Office. Ms. Ray is an experienced, poised regulator; Ms. Badwan is a careful, intelligent attorney. Both are homegrown (Dunn and Raleigh) and both are thoughtful listeners. That makes for a great audience!

✅ Thought it would be good to share with you the follow up letter from the meeting. You'll note there are three serious concerns. The first concern over financial statements was easily resolved yesterday by Rex Spivey, CFO at SECU. [link 7/26/2023 post] The next two are going to be more difficult to correct. Our next topic is that "this Board" has directly violated the SECU Bylaws with it's new Election Procedures. The mistake presents a major governance dilemma for the members of SECU, since the 2023 election process is already underway. But we'll talk more about this latest Board snafu in a bit, Here's the letter ...

Ms. Kristina Ray, Administrator of North Carolina Credit Unions 

July 25, 2023 (5:26 PM)

Dear Ms. Ray,

We would like to thank you for the time and courtesy you and Ms. Badwan gave to us today to discuss several issues which have arisen with SECU. The three issues were 1) the monthly publication of financial statements, 2) the serious non-conformity of the new Election Procedures with the SECU bylaws, and 3) the inconsistency with North Carolina laws of the SECU bylaw changes recently approved by your predecessor.

These issues if not addressed immediately by the Credit Union Division will risk accentuating a growing concern and mistrust among SECU members over the leadership of SECU by the existing Board and management. A crisis of confidence in the Credit Union poses a substantial safety and soundness issue, which should be avoided at all cost. We do not need an unwarranted Silicon Valley Bank-type event in North Carolina.

You asked us to file a complaint which we will not do. These issues are not personal complaints by a member vs a credit union. All three issues are regulatory matters which require your intervention. It is not the duty of the membership to assure that SECU abides by N.C. State Statutes, Credit Union Division rules and regulations, and the CU Division approved SECU bylaws. That is your duty.

We suggested several remedies and actions which could help ameliorate, in the short term, all three issues quietly and we would be open to further discussions with you to resolve these issues permanently and hopefully amicably.

As we discussed, the Credit Union Division has the ability to address and resolve these issues "informally" with SECU, which hopefully you will pursue. A formal complaint and investigation will serve little public purpose and you may well trigger that crisis of confidence which harms all members and all of North Carolina.

Look forward to hearing from you this week on how you intend to address these critical matters. As with a house on fire, the consequences are certain if you do not act quickly.

Thank you again for your responsiveness. Enjoyed meeting you both.

Jim Blaine

One would think that repeatedly, publicly shaming North Carolina and 2.7 million SECU members would become a concern for individual members of "this Board" at some point, wouldn't you?