Saturday, April 27, 2024

SECU Board Of Directors Announces More Risk-Based Lending (RBL) Restrictions...  ... House of Cards?

Well it is official, many members need no longer apply for a loan at SECU - their credit union!  

The SECU Board has recently announced its "new and improved, member friendly" risk-based lending (RBL) enhancements - which are - as is now normal for "this Board" - anything but! We will be talking about RBL for the next few days. 

SECU members need to fully understand the disastrous impact these new lending practices have - and will have - on their individual financial health and on the financial performance and reputation for fairness of SECU. Staff morale and member support are also in jeopardy.

These new changes are an acknowledgement that RBL is not working, although a full, frank admission of guilt is still "a bridge too far" for the senior staff and Board.  Members have seen this reluctance to confront the full truth many times over the last two years - a on-going commitment to a lack of candor, but always committed "in good faith"

But lets go slowly and study all these changes one step at a time. First and foremost, you should note that the senior staff is "sticking the Board" with full accountability for adopting RBL. Here's from the memo to all staff: "The SECU Board of Directors approved changes to our pricing structure for consumer loans (moving to three tiers instead of five) and, to help minimize risk with these changes, the Board also established additional product limitations for borrowers with credit scores below 600." [credit scores range from 350 to 850].

From past experience in business, when "problem clouds and controversy" appear on the horizon; it is not unusual for management to hedge their bets and identify - early on - scapegoats for their bad decisions and poor leadership. The SECU Board has now been fully anointed with the responsibility for RBL. Buck has been passed, the Board now owns - and holds - the bag! 

😎 In justifying this change, "The Board" makes a beyond obvious statement, that moving from 5-tiers to 3-tiers will be easier and less costly to administer. Why would "The Board" have thought otherwise last year when they adopted the 5-tier system after: "The Board spent over a year reviewing information, requesting data, and debating how to meet the needs of all members."? 

That 5-tier "Board" mis-decision cost SECU members in those 2 unjustified tiers millions in excess interest charges. [no mention of refunds!]

😎  Question for the Board: Do you think 1-tier would be "easier and less costly to administer" than 3-tiers?   

"Your call"!    

  ... in member lending,  SECU is clearly no longer playing with a full deck!