"The Assembly publishes deep reporting on power and place in North Carolina."
"The Assembly" is a widely-followed North Carolina political/business/social policy newspaper published online each week. One of the featured stories this week is a deep dive article on SECU by Carli Brousseau entitled "Do The Right Thing" [https://www.theassemblync.com/
Well worth a read, as it covers a lot of ground on the problems which have developed at SECU and why a contested election has been the result. Take a look!
Won't rehash any of the story, but suspect some of you - after reading it - might like a "little explanation" about two blurbs involving me in the story. Fair enough! The first one was a joke about "brothels and bankers". That line was used during a national debate between the president of the American Community Bankers Association and me about 15 years ago. The forum was the Government Affairs Conference (GAC) of the Credit Union National Association (CUNA) in D.C., the largest credit union trade group in the U.S.
That type of ribald humor didn't go over well with some folks then and still wouldn't today. You might be interested to know that one of the chief topics of that national debate 15 years ago was risk-based lending (RBL), the same issue which has drawn the ire of so many SECU members this year. With the adoption by the SECU Board of the unjust, discriminatory risk-based lending in March, 2023: SECU has joined the ranks of many other financial institutions assuring that people who know the least and have the least always pay the most for financial services - that's not a joke for the members of SECU. And lastly as a experienced speaker, three words to the wise: 1) Try to entertain, 2) Never be dull, and 3) Never make the same mistake twice - I haven't on this one!
The second blurb which I call "The Godfather Story" (as in Marlon Brando and "the Family") is a little more complex. I didn't recall that tale when Ms. Brousseau brought it up. So, here's what I sent her about what I knew...
- Have known Emily Hollis, principal at ALM First [link] for over 25
years. As an investment advisor ALM First earns its keep primarily by
managing investment portfolios for clients for a fee.
- I think very highly of Ms. Hollis, always have. As far as I know, the relationship has always been cordial.
- Ms. Hollis is among the better investment gurus in the credit union space - smart, knowledgeable, widely respected.
Hollis over several decades sought to assist SECU by managing part of
the SECU investment portfolio (which at @ $14 billion is one of the
largest in the CU industry.)
- SECU has always managed its own investment portfolio which saves millions in fees for members. SECU never used any outside brokers, including ALM First.
- The in house investment management at SECU continued under the leadership of Mike Lord, SECU CEO, until Sept, 2021.
- Mr. Hayes, the new, now departed SECU CEO, in 2021/2022 outsourced @ $5 billion of the SECU investment portfolio to an investment advisory firm - ALM First! (see some background verification info from a retired investment manager at SECU under next bullet).
- Email exchange 9/30/2023 with former SECU investment manager: Q) Refresh my memory....Did SECU outsource to ALM First $5 billion of the investment portfolio? Or what was the story on ALM First, Emily Hollis, the $ amount? A) SECU did outsource to ALM First, no question about that. But as for the exact amount, I couldn’t tell you. The clamps were put on giving out that kind of information well over a year ago, even to people like me, thanks to this Board and Jim Hayes who didn’t want negative news getting out in the public eye. Even [name omitted] dodges any questions I ask about the portfolio. I do think I remember hearing a $5 billion number being thrown around but don’t remember the source. But believe it’s safe to assume that any securities on the call report other than cash or US Treasuries (UST), ALM First did it. My understanding is that SECU still does UST trades themselves. Q) ...did y'all move to using brokers under Mike Lord (whether ALM First or others) or did you continue in house? A) No, we always executed the trades in house, but of course we needed brokers to take the other side of the trade. Settlement was always "delivery vs payment" (DVP ) through the Fed, safekeeping at Fed also, we never put money on deposit with any broker.TradeWeb was/is (?) our medium of communication with brokers going back to 2001. It saved us tens of millions of dollars in trade executions over the years, maybe $100 million or more, and that’s a no sh*t, no exaggeration number. Better, more efficient and more timely pricing. Being able to go straight to a broker’s bond trading desk vs having to deal with a middleman over the phone.
- Mr Hayes now serves on ALM First's Board of Advisors [link]. The
financial circumstances, if any, surrounding that position are unknown.
That coincidence was mentioned publicly in the SECUjustasking.com blog post and
Ms. Hollis may have taken offense.
- The announced assets under management for ALM First in 2021 were @$50 billion, so acquiring an additional $5 billion from SECU was not an insignificant business transaction for ALM First.Fees for investment management can vary widely, but advisory fees for managing $5 billion would be significant.
- ALM First has many key clients in the CU industry including in the past Wescorp.
- Although I don't recall the incident, I believe the story, if Ms. Hollis said so. She has always been credible.
- It would be helpful to hear more fully how Ms. Hollis related the story to you and why it is being told at this juncture in time? Could you provide a more complete summary of "The Godfather Story"?
- I believe the debate must have occurred at one of ALM First's own conferences held for CEO/CFO's - this one in Las Vegas in 2010, is that right?
indicated the incident revolved around the preparation of an investment
analysis report, which was probably a topic of discussion at ALM First's conference.
- Was the report ever published? If so, is a copy available?
- Would you send a copy?
- What exactly was the nature of the dispute between Ms. Hollis and me in the report?
- Was there a reasonable basis for the disagreement?
- How was the dispute resolved? Was the resolution fair?
- Did ALM First (Hollis) and SECU (Blaine) remain on amicable terms after the Godfather story dispute?
- Why would "The Godfather Story" be considered anything more than poor humor gone awry?