... whose point of view?
As with most things in life, there are two ways to look at a loan - from the borrower's point of view and from the lender's point of view.
For borrowers, the hope is that a loan will help improve their lives - better house or car, educational opportunities and braces for the kids, pay taxes, dream cruise, fix the fridge, keep the lights on. Borrowers come to lenders with a goal, with a purpose. They don't just drop by to enjoy "the experience"!
In banking, the purpose of the lender is to make a profit; at a credit union the purpose should be to make a difference.
Borrowing at a bank is an "adversarial transaction". The banker and the borrower have different purposes. The goal of the banker is to make the most profit possible from the loan for the bank - nothing wrong with that. The bank borrower wants the best terms and lowest cost possible. In commercial banking, both banker and borrower are generally financially knowledgeable and skilled in negotiation. It's a "fair fight".
At a credit union, the goals of the borrower and the lender should be the same. After all, the loan officer works for the members, who own the credit union. And, the credit union was created not to profit from the membership. In consumer lending, the credit union loan officer is generally more financially knowledgeable than the borrowing member. Members rely on the loan officer to represent their best interests, to craft the best solution for their loan requests - to "Do the Right Thing". The transaction should be one of trust, not adversarial. SECU no longer seems to understand the meaning of trust.
The credit union loan officer should seek only to make a sound loan which is of benefit to the member - and which will be repaid without hardship by the member.
So, from yesterday's post [link]: "If a loan defaults at SECU and a loss occurs, who made "the bad loan" - the member or SECU?"
😎 "The growing lending snafus - costing you as an SECU member over $100 million+++ per year - is not a minor fiduciary matter."
"Somebody's" not doing their job - responsibly! Every member is losing...
... RBL $100 million+ losses is "Really Bad Lending" from every members' point of view!
Loan Administration trying to centralize everything lending - think collections, loan decisions, and rules, rules , rules - has been the death knell for both SECU (charge offs, delinquency) and the members (RBL). The credit union needs to get back to local, local, local and let its strong branch network "do the right thing". They are amazingly good at it.
ReplyDeleteYeah let’s let every branch and loan officer do things differently. That seems fair.
DeleteYeah @11:23, let's not consider what worked great for 85 years since everything is going so perfectly now.
Delete@11:23. I hear this the excuse often to support centralized lending. It's a false narrative to imply that it was the "wild west with no rules" and no consistency prior to centralization. But in reality, branch lenders always had policies and guidelines to abide by. The increased oversight by internal departments within the organization (in this case Loan Administration) was quite simply not needed.
DeleteBut some folks don't like to feel that they're not needed, so they create the need.
@ 11:23 you have to got to be kidding? You think SECU became the great credit union it was with all employees doing their own thing? Up until the fall of 2021 we were a unified organization who always followed the rules. Easy to do when the rules make sense and you have trust in those making the rules. Member satisfaction and bottom line numbers touted SECU's success. Do you really think what is taking place now is fair? To the Members? To the Employees? Relieved to know you aren't the final judge on what is considered fair at SECU.
DeleteWhat if someone told you these lending changes were from regulatory pressures and really had nothing to do with the board or Brady? Would that change anyones opinion of what is going on? You can only fight government oversight for so long.
Delete"What if someone told you these lending changes were from regulatory pressures ..."
DeleteHow's that DEI looking now ... guess they kinda threw the 600 score people under the bus ...
@8:07 - NCUA is the insurer, they focus on safety and soundness. They look whether or not your board policies first violate law and second pose a risk to the insurance fund. RBL or flat tier pricing is up to the institution. All NCUA or CFPB will ask is how do you plan to mitigate risk on loans. Every other institution would say we risk base lend to offset costs of the riskier loans. SECU has always pushed back due to years of delinquency data and a lower than peer average delinquency rate and charge off rate.
DeleteSECU has always had the regulator pressure. I remember an older Chief Auditor for SECU say if its not violating law or causing a risk to the insurance fund, then that is you opinion and we will take that under advisement.
So “regulators” want racist/sexist lending? “Regulators” want massively higher charge offs? “Regulators” want members to move their money to other financial institutions due to below market deposit rates?
DeleteThis is what happens when incompetent individuals are put in positions of power and have to rely on the “expertise” of over priced consultants who’ve never actually accomplished anything.
All the consultants can offer is what everyone else is doing. Consultants have no experience running with unicorns or Ferarris!
Deletevery well explained so even the "leaders"? should be able to understand...
ReplyDeleteIf “the leaders” wanted to understand. Too bad for all of us members and employees this board won’t listen to anyone but themselves. In an echo chamber. Numbers mean nothing to them. Not sure how they are measuring success. Oh right! Leigh Brady said last year was the “most profitable year ever”. Sounds like a BANK doesn’t it?
DeleteAt this point, I think everything happening is to get most employees to quit, especially anyone employed 10+ years
ReplyDeleteGreat explanation on difference of banks and credit unions. Thank you.
ReplyDeleteOne of the differences! Most important one!
DeleteSECU never needed a consultant firm before to tell them what was best. Now that they did, see what happened. . SECU used to be different and we didn’t become that way by hiring a consultant firm to tell us what to do. Our retired leadership was all about helping our members.
ReplyDeleteUnless things change, I’m not sure what SECU’s future will be.