... fooling around?
Everybody makes mistakes, but is the SECU Board getting too good at it?
Lets pause for a moment, as we work through Lending 101 at SECU from the member borrower's perspective. Tried yesterday [link] to point out that in the past, lending was viewed as a cooperative effort between the member and the SECU loan officer, both had the same goal and purpose - a prudent, productive loan. With soaring loan losses and delinquency, something has clearly gone wrong with lending at SECU in the last 3 years.
Both sides are losing - no argument with that!
Why blame the SECU Board? Normally wouldn't, because a board - in any business - usually doesn't "make policy". A board generally serves mostly to review and approve professional staff policy recommendations. But the SECU "Executive Leadership Team" ('The ELT') made it very clear in recent memos that the SECU Board is "to blame"!
But "blame" isn't the goal here, accountability is!
In your new role as an SECU loan officer, lets consider a couple of recently adopted "SECU Board loan policies":
- Members with credit scores below 600 are no longer eligible to apply for a home equity loan (HELOC), which is a "second mortgage". These members are eligible for limited new/used car loans. Question: If you were lending money to someone, why would you make a loan secured by a member's used car, but refuse to use their home as collateral?
- SECU credit cards have two rates. If you use your SECU credit card to make a purchase the "preferred" rate is 13%. If you use the same card on the same day to make a cash advance (say at an ATM), you and all members are charged a rate of 18%. Same card, same member, same risk. Question: Why are you charged so much more for a cash advance?
- Why are you - or any member! - charged 18% for any loan at SECU, when "the Board" is paying less than 3% on member savings deposits (the money "the Board" is lending to you at 18%)? Quite a "profit" for a non-profit credit union, isn't it? Question: Why are member savings rates so low?
- Under the new 3-tier risk-based lending policy, members with "no credit score" receive the highest loan rate ("C"-tier). Borrowers with "no credit score" are usually folks just starting out in life - young people who haven't had access to credit. Young folks need a lot of stuff - a car, furniture, rental deposit, for example - and of course a credit card! Question: Why does "the Board" assume that all young people are not creditworthy and stick them with the worst SECU loan rates?
Why is a newly minted N.C. teacher assumed to be "guilty until proved innocent" in terms of credit at SECU?
Question: Do you as a member support that policy?
Many circumstances can bring people together to create a Common Bond. It has been a founding tenet of credit unions since their inception. However, as founding CUNA member Louise Herring said, “Poverty should NOT be a Common Bond”. Nor should a credit score or the lack of one. Not providing the same opportunities to all members is discrimination.
ReplyDeleteCredit cards. The hype (grandiloquence) they put up for the new "rewards" credit cards in the last townhall !!! Guess the newbies are ashamed with a simple basic one. There are always alternatives for flashy products but good old keeping it basic and low key to help the members 'and' prosper is not in SECU guidebook anymore. No wonder 'There's a difference' has been completely wiped out. Like bombastica's crony said, what difference, there's no difference. To them, there's no difference. But for a member there was always a difference. And if you are not in their shoes leading a similar life, you will NEVER understand.
ReplyDeleteThere is no difference to them, they have always crapped on people, "Industry Standard". It's just a different set of people now. We live in a sewer overrun by rats!
DeleteWhat’s wrong with having both? Why not target members who pay off their balance every month and want a rewards card while also offering a lower interest rate card for members that carry a balance?
DeleteLee Chalk, how is your 'Why not number 1?' sligan going? SECU is losing millions and sliding downhill pretty quickly. Have an alternative slogan or solution to that?
ReplyDeleteAfter a while you realize it's not a mistake, it's become policy ... they shaft those who have no voice or means to fight back (easy picking). In my eyes they are no longer operating as a credit union for the member/owners but are in it for themselves and 'their' friends and families!
ReplyDeleteThey think this is THEIR credit union ...
And the board and Brady are not listening to anyone but themselves and the consultants that are being paid to tell the "leaders" what they want to hear. They refuse to ever answer questions. When there is a "public" forum, it is invitation only. No question sever from the floor. Only submitted ahead of time, then the "leaders" pick which questions deserve a response and give some canned blah blah blah with no substance. "NEVER respond to a member!" has replaced "Do the Right Thing." Turn these guys out!! 4 in 24!
DeleteHell NO!
ReplyDeleteNot no but——————- of course not!
ReplyDeleteIt all sounds simple to me. The credit union wants to be a bank. It is now trying to do all the things that a bank does. (Increase loan yield at all costs, centralize as mush as possible, maximize profit at all costs, treat members differently based on their credit profile, etc.) One major problem is that banks are so much better when it comes to playing that game! They will crush us. (I'm sure we'll see more losses when the 3/31 call report comes out.) In the meantime, the board continues to speed down the wrong lane. If they get their way, the credit union will crash. (I've looked at the board and very few have the background necessary to really be successful helping to navigate a financial institution. And the CEO seems to have come up on the HR side of the house. That's great, but a CEO needs a very different skill set.) Thanks to everyone sounding the alarm. I really hope it will create a change in direction.
ReplyDeleteThe leadership is pruning the membership. Clipping off those dead leaves.
ReplyDeleteLeigh Brady made that plan at the SEANC meeting last May. Those young folks just get their mommy to sign the loan for them and they can have the A+ rate. Leigh did that for her daughter! Easy as pie. What's the beef, Mr. Blaine?
ReplyDeleteI have been a member for over 30 year's. Only financial place I have ever dealt with. I don't have a lot of money on deposit. I used to be so proud to bank at the SECU. Often spoke so highly of the institution and whenever possible if someone was eligible tried to tell them all the great things about the credit union and why they should join. As of the last 3 years or so, do not feel that way any longer. Don't recommend them no longer and considering moving my accounts. Just not the same SECU that I was so proud of.
ReplyDelete