Friday, May 17, 2024

SECU's "New, Improved, Less Discriminatory": 3-Tiered Risk-Based Lending!...Baaaah, Baaaah...


                      "We're SECU!"

Always had a problem with risk-based lending at SECU for several reasons ... and as an SECU member, so should you.
  • Too impersonal -  SECU members are treated as canon-fodder with little room for exceptions, nor for mercy - not what a credit union is about.
  • There is no appeals process.
  • Credit score lending is based on a false statistical model - correct at the "macro theory level", but unfair and abusive at the individual SECU member level.
  • Pricing "for risk" substantially overcharges the vast majority of SECU members in the higher risk tiers, the majority of whom faithfully repay their SECU loans - always have!
  • Risk-based pricing is an unnecessary subsidy for more affluent SECU members, who are also unnecessarily penalized by SECU's low savings rates.
  • Charging regular SECU members higher loan rates - unjustly - increases the risk of loan default, discriminates on the base of age, race and gender, and has severely tarnished the reputation of SECU,
....but other than that I have few concerns about the practice.  The threat which is now waiting to bite SECU - as a risk-based lender - on an indelicate part of its anatomy, is the concept of "disparate impact". 

Disparate impact is anything a lender does which unfairly discriminates against a "class" of borrowers - like "tiered" SECU members!  Whether intentional or not, if the lender - read SECU - is shown to have adversely penalized a class of borrowers; lawyers are going to make SECU cough up a whole lot of cash to make amends. 

😎  How do you know SECU is intentionally or unintentionally discriminating with RBL? Because the SECU Board and CEO just publicly confessed! How so? 

Well, SECU has now admitted that the 5-tier RBL system installed in 2023 did not work and overcharged SECU members. 

So now, "The We" have come up with the "new, improved" less unfair and less discriminatory 3-tier system!!

..."less unfair and less discriminatory"?... time to get out the snafu checkbook - once again?