SECU - Race-Based Lending: Some Members Are "More Equal" Than Others?

   

Given the dilemma NavyFed now faces...

Would like to repeat the most glaring, real life example of what has gone missing with risk-based lending at SECU. What's gone missing? Fairness. Take a listen...

Ms. Leigh Brady is now the CEO of SECU. Ms. Brady is a 30+ year employee, smart lady, who came second to the former CEO in the SECU executive search process two years ago. Rumor has it that Ms. Brady and Hillary Clinton still suffer traumatic nightmares from such experiences. 

As mentioned in a prior post (May 22, 2023), Ms.Brady asked to make a presentation about risk-based lending to the Board of the State Employees Association of North Carolina (SEANC). Why? Because in February, 2023, SEANC had voted unanimously to ask SECU to rescind the introduction of risk-based lending (RBL), until the two organizations could discuss that change. SECU agreed to a meeting, but in the interim introduced RBL anyway (see March 26, 2023 post). Ms. Brady wanted to clear the air on the issue of risk-based lending for the SEANC Board.

  Ms. Brady summed up her far from convincing explanation of the benefits of RBL - it was weak on only two points, facts and substance - with the following personal story. 

She indicated that her recent college graduate daughter had just bought her first car. Being a young female with little credit experience, her daughter had not qualified for the A-paper best auto rate at SECU. But Ms. Brady explained that wasn't a problem, because Mom just co-signed the loan which then qualified her daughter for the A-paper rate. See, RBL really does work well and is fair!

There was a moment of somewhat stunned silence in the room among the 40 or so SEANC board members. It was one of those: "I can't believe she just said that" moments.

Then a young, female, Af-Am SEANC board member rose and said politely: "Ms. Brady you need to understand that most of us don't have an affluent parent who can cosign loans for us." 

And, it was obvious to all in the room that Ms. Brady - and the SECU Board!! -  either don't understand the financial realities of most SECU members, or simply don't care. 

It proved useless to point out to Ms. Brady - though several SEANC board members tried - that her own personal example with her daughter, confirmed that risk-based lending discriminates against young people (credit scores generally -43 points below average), females ( -12 points below males), AF-Ams (-26 points below Caucasians) and people of modest means - all confirmed by independent research on credit scores.

The board members of SEANC were too polite to ask Ms. Brady why SECU felt her "credit scored and unfairly profiled" daughter, under race-based lending, represented such a high risk of default to SECU?

  The credit score wasn't wrong, was it?  

Then who is? Likely suspects ...

     

... "the 8" +1?

 

Unfortunately, Perception Sometimes Becomes Reality: Race-Based Lending?

 ✅ Pressure Mounts Over Navy Federal's Alleged Mortgage Loan Disparities

Carl Carr (center) speaks during a press conference on Feb. 22, 2023.

Attorneys for nine Navy Federal Credit Union members, who were allegedly denied a mortgage because of their race, stepped up their pressure on the world's largest financial cooperative during an emotional press conference.

"Let me say at the outset that we wanted to have this press conference at the National Action Network House of Justice to show that this is not just some complainants and some lawyers. This is a civil rights issue that all of us will weigh in behind these attorneys to deal with the inequities that appear to be deliberate and intentional." 
 Credit Union Times [link] Peter Strozniak| February 22, 2024 at 05:40 PM 

✅ And has all sorts of painful consequences:

Mary McDuffie will retire as president and CEO of Navy Federal Credit Union where she has worked for 24 years. Her successor, Chief Operating Officer Dietrich Kuhlmann, will take over on March 1.  ["American Banker" newspaper - 2/21/2024]

 

✅ From: "A Measurable Strategic Plan: SECU 2024" [link post 1/8/2024]:

 

✔✔ 2. Risk-based lending - The SECU Board has to date refused to review with the membership the concerns surrounding risk-based lending at SECU. Management has threatened to extend race-based lending to home financing (mortgages and home equity loans) for all SECU members, which will tremendously impair the affordability of member home-ownership - not to mention the reputation of the Credit Union. Changing "their bias" may require much greater action all during the year. Watch for the fall-out and fall-off in the pace of lending growth - which is already underway.  

 

✅ Why "risk" it? 

 

  

✅ Oh, that's right... it's "Industry Standard"!**

 

** "industry standard"- idiom, n., definition: to be neither better nor worse, middle-ish, average, halfway between good and bad, "C-paper"; for synonym see: mediocre. Often used as a substitute for original thought in strategic plans. 

 

... h-m-m, class action lawyers usually start at the top. NavyFed is the largest credit union. Who would be next in line....??