... guilt tripping, the guilty?
* Source: CNBC News (2022)
Strike 1: One
in five Americans (@ 20%) are penalized with higher loan rates or out
right loan denials because they have no credit history. Young Americans,
such as recent high school and college graduates just starting out in
life, are the most harmed. These young people are considered by
risk-based lenders to be "guilty (and penalized) until proven innocent", not exactly in line with our American approach to justice - which is, last time I checked, "innocent until proven guilty". [Say our CEO's daughter for example?]
Strike 2:
A recent national, independent survey found that over one-third (34%)
of Americans' credit reports contained erroneous data. And, even more
outrageous, the burden (time and costs) of correcting the errors falls
on the American consumer - you and me. [Or punitive data created by natural disasters, med debt, predatory landlords, unexpected job loss, divorce, premature death].
Strike 3:
African Americans disproportionately (54%) have lower, poor, or no
credit score. Probably don't need to say anymore about that because we
all know America is "not there yet" on racial equality. RBL is a step
backward in time on social justice for SECU and its member-owners. [Lending should be "content of character", not color of skin - or gender.]
To err is human, ... to "Do the Right Thing" divine. To do nothing is... "industry standard"!
SECU is better than this... or used to be.
Yeah because major news outlets haven’t shown they are willing to report erroneous or misleading information in order to maintain or increase viewership.
ReplyDeleteNot guilty, because it's fake news - ok!
DeleteSECU use to blaze their own narrow trail for member/owners benefit... now it's path is on the wide road of greed ...
ReplyDelete“Enter through the narrow gate. For wide is the gate and broad is the road that leads to destruction, and many enter through it. But small is the gate and narrow the road that leads to life, and only a few find it."
This is 100% victim mentality. We should be about promoting and rewarding financial health and responsibility. To your strikes:
ReplyDeleteStrike 1: People with no scores are a higher risk than those with good scores. If they don't pay for that higher risk everyone else does. Last I checked, access to credit is not a constitutional right. What amendment offers due process when you apply for credit?
no amendment needed to "Do the Right Thing"
DeleteEveryone who belongs to the credit union should be treated as the member/owner they are, including one borrowing rate for all. There is always risk, we never know what lie ahead ... your life can change "in a flash, in the twinkling of an eye" ...
Which tiers do you think are causing loan losses at the highest percentage? Which tiers have the highest servicing costs? Which tiers require the highest loan loss reserve per account with the required CECL model? RBP allows us to continue lending to many members that other banks would not lend to at a competitive rate
ReplyDelete10:05pm "Tiers" don't cause loan losses, bad lending leadership and practices do. And the "new/new/rbl" lending system is certainly excelling in that arena!
DeleteUnder the New/New lending debacle, outstanding loans at SECU have increased by 37% - that's good! - over the last three years, while loan losses have increased by 300% - that's abominable. Don't know how much more of this type "lending success" the membership is expected pay.
The members aren't making bad loan decisions, SECU is!
Why are you approving so many bad loans? Your error rate is up 3x!
It’s the member that is not paying the loan back as agreed.
DeleteIt's SECU not screening the algorithm approved loans, and denying loans to members who consistently pay SECU back regardless of credit score!! Do your due diligence! Stop relying on a number generated by an outside source to make the decisions for you!
DeleteStrike 2: Bad things happen to good people. Not everyone who has something unexpected happen to them has a financial crisis. Good financial health includes being insured and having emergency savings. Stats say many americans don't have emergency savings. I wonder how many smoke 3 packs a day, have an $8 latte, and have the latest Iphone? Have you ever tired collecting on a loan when the member tells you they got a divorce and can't make their payment, but you look in their checking account and see 10 ATM cash withdrawls from the casino.
ReplyDelete10:37pm Like this part: "Bad things happen to good people." Not sure how the folks in WNC could hve planned for Hurricane Helene... you skipped over that part.
ReplyDeleteWasn't aware that after the disaster those 220,000 households took up smoking, drinking $8 lattes, and ran off to the casino to recover. Not sure about the i-phone issue, heard cell service was kinda spotty for a few weeks.
But glad you feel the correct punishment is to slap them with higher rates if their scores drop... because they weren't prepared. That'll teach 'em good!
@10:32.. you continue to demonstrate you either have neither any details of the actual loss performance by vintage, product and tier, nor a basic understanding of portfolio dynamics and the latent, inherent and layered risk in the loan portfolio.
ReplyDelete10:50 pm Maybe not, but I do understand the official reported #s - total loans up 37%, actual loan losses up 300%!
DeleteThe losses are real. Why is SECU making so many more bad loan decision?
New mantra: "The members aren't making bad loan decisions, SECU is!" Own it!
10:56pm your problem is you can't go deeper than the highest level information in the financials and call reports.
Delete11:07pm Does the up 300% figure - quarter of a billion $$$! - in loan losses get better somewhere lower in the financial statements?
DeleteSECU is simply making more bad loan decisions than in the past.
The financial statements are how one keeps score in any business... you're "striking out" on this one.
The Board does know this, right?
rest assured the board knows and sees more than you. you can cherry pick one little data point and compare loss increases coming off of multiple decade low loss rates during the pandemic.
Delete11:30pm Good then hopefully they will act soon to adjust!
DeleteA 300% increase in loan losses in 3 years is a little more than a "cherry pick" - its a quarter billion $$$ buck loss which all members are paying for.
Glad you acknowledge that loan losses (both $$$ and %) at SECU were lower when compared to decades prior... as I recall the pandemic only lasted a couple of years ... need a better "reason"... guess there's always Mike Lord!
"The members aren't making bad loan decisions, SECU is!"
The members are the ones not paying the loans back.
Delete10:46pm Yep, but the question is why SECU new/new lending keeps making these bad loans and handing out free money... "our" money btw.
DeleteThought the new/new rbl was going to improve lending performance by use of those highly accurate credit scores?
Ain't working is all the official #s are pointing out... up 300% in any category should draw SECU Board and leadership attention.
So if the board tightens lending policies to lower risk, I am sure you will cheer them on. Or you will have a new post complaining that more members are being denied.
DeleteStrike 3: Do you think the black americans that applied to a white loan officer in the south fared better 20 years ago?
ReplyDelete11:00 They did at SECU... everyone received the same rate, remember.
DeleteThe discrimination is something "new/new" at SECU! Take a bow.
I commend you.. you must have been a frontrunner on unconscious bias training. Everyone in the free world has biases, except SECU employees. got it.
Deletewell, you can be super and biased, but only if you are human, I guess. those committees were a lightning rod as a violation of fair lending in terms of consistent treatment, or more specifically avoiding disparate treatment and impact issues.
Delete11:51pm Was there for 40+ years and don't recall SECU ever being sued by members for lending decisions, nor being sanctioned by regulators.
DeleteDidn't happen did it? Maybe members believed they were being treated fairly because the credit union was willing to listen to them...they were more than a credit score, more than a digit.
Again, need to find a better "reason".
"The members aren't making bad loan decisions, SECU is!"
well guess what, maybe the regulators and current management are more appropriately assessing that risk more accurately than you did 40 years ago. one of a very long list of archaic and non-sustainable business practices you had in place that just don't play in the modern world.
DeleteHow do you know the data doesn’t show SECU denying blacks at a higher rate than whites 20 years ago? Did SECU collect that data across all lending products 20 years ago and analyze it? How do you know branch lending 20 years ago, which was the vast majority of lending at the time (not the case anymore), didn’t discourage minorities from even applying 20 years ago?
Delete@11:51 - Hey dude (or dudette) just give up, you're embarrassing yourself. You are never going to conjure up a defense for the truth - RBL is discriminatory, period.
Delete"those committees were a lightning rod as a violation of fair lending in terms of consistent treatment, or more specifically avoiding disparate treatment and impact issues."
DeleteWhere is the evidence of this statement?
or are you just making stuff up as we go along?
or is this part of your DEI training?
7:29pm Regret that facts keep getting in the way of your "unconscionable" biases.
DeleteThe Home Mortgage Disclosure Act (HMDA) is best example. The law was passed in 1975 and most financial institutions report their lending on several different levels including zip, race, gender etc. The official data doesn't support your "theory"... not trying to deny your right to make stuff up, but y'know facts matter.
SECU didn't "get lucky" for 85 years in this area... it was an embedded commitment to fairness based on past board leadership and cooperative principles. You might also note the strong support that SECU has long enjoyed among all member groups in North Carolina... hope that's not being lost.
SECU again - unless under "new/new" - has never been sued nor sanctioned over discriminatory lending. Could it be that you have a bias against unicorns?
Like gravity, just because you've never seen one doesn't mean unicorns don't exist... or did at one time.
@8:39... don't need a defense for RBL. It's the opposite. need to hear a case not to do it, and a credible one hasn't been put forward.
Delete12:19pm See 12:16 pm below for credible solution to the incredibly costly "new/new RBL"... wouldn't $150 million in lower loan losses be worth a try?
DeleteHow can SECU even effectively collect on loans without the ability to take a payment from a amabwr over the phone? Unless the member has funds at SECU, they can’t do that right now. But I guess SECU technology is great and doesn’t need to be updated.
ReplyDeleteyou've had 4 years to update that 1987 technology, what ya been doing while you've been working from home? Have ya picked a core system out yet or are you guys still wining and dining and flying around the country?
Delete9:47, you clearly do not understand the scope, expense, and amount of resources necessary for a core replacement. You also clearly do not understand the tangled web of SECU supported systems feeding off of the current core that are ineffective, inefficient, and dangerous.
Deleteoh that's right the core picker-outer left for greener pastures, couldn't take the challenge just the money ... more money down the drain ...
Delete10:40 I worked there for 25 + years ... I know all about it...
DeleteYou guys Gym brought in were the saviors and they spared no expense might I add ...
What wrong, can't figure it out? or are you waiting for AI to do your work for ya? Maybe get into the office and sit down and do they job you are paid to do ...
Y'all are 'All hat and no cattle' ...
I'm waiting... but I'm getting older ... will it happen before I depart this world?
Gym rolled in and you guys kicked us out (you know, go find your passion elsewhere), all the folks who knew the systems inside and out, and declared you would replace the core in 18 months! Btw we all just laughed at your brazen display of chutzpa!
DeleteMaybe if you had a little bit of self awareness you would have realized that the old guard would have been a valuable resource for you ... but nope, We got it from here guys y'all can take a hike!
Well it's all yours ... maybe hire some teenagers to help you out, because the veterans only seem to want paid!
9:47pm Just to confirm the "nothing new" in tech comment... SECU recently added a "Digital Services" heading on the website.. the "digital" services featured like mobile app, member access, online website, billpay, quicken download, fico score, etc are all pre-2021, ...think it might be reasonable for the "new/new" to hush-up until they actually do something.
DeleteCertainly tech can always be improved... but like the car most of us drive (avg age 12.6 years) it still gets us around pretty well.
Sorta hilarious to keep whining about that miserable technology which has supported SECU members well even after the "new/new" arrived ... awkward optics at best, but mainly just silly.
The way the “upgrades” were made by previous leaderships is the main reason why it is so difficult to make changes now. They resulted in a crazy tangle of systems that is extremely difficult to untangle and had limited to no documentation. Whoever did these should have been fired long ago.
Delete1:24pm From experience changing systems, upgrades, etc are always difficult and time consuming... shouldn't be any surprises there for tech professionals. Can't say about the weakness/strength of documentation, but can believe that was imperfect.
DeleteBut thank you, this comment is much more intelligent and credible than the "no change in tech since 1983" statement put forth in the TBJ by the ELT and yet to be recanted by an SECU Board which knows full well it wasn't true.
Shame on...
A wise former employee who was edged out early on by the Hayes entourage once told me that the day would come when the new/new would have to stop blaming the old guard and actually DO something. Well, the chickens have come home to roost. Own your failures and stop blaming others and fix the problem!
DeleteTotal mistep by Bomba and Hayes by vastly underestimating the effort to replace some of those systems.
DeleteThere are libraries of documentation.
The fact that it is too complicated for the "Point and Click" generation of employees that Bomba brought in is not the fault of the hard working and dedicated employees who did what they asked. We would have helped them understand it but we were disparaged, demoted and discarded rather than valued and consulted.
It was easier for Bomba and company to enhance their own reputations by destroying ours than it was to actually work hard and get the job done. Now they have lost over three years and most of those with knowledge has moved on.
1:24 PM
DeleteDon't worry Artificial Intelligence will figure it out for you since you can't ...
SECU is the 'culture of confusion'... self smugness has crept in ...
ReplyDeleteStrike 1: People with no scores are a higher risk than those with good scores. If they don't pay for that higher risk everyone else does.
ReplyDeleteI have good credit, I have a good job, I pay my bills on time now give me what I am owed a Grade A loan... the heck with the rest of you!
Deletethe new/new mentality of your fellow members
:(
10:56, the problem is it was one rate for all, not he best rate for all.
Delete12:02pm Why keep arguing?
DeleteA) If SECU now has the best A-rate around and A-rate members are flocking back, as you say, then...
B) Keep that best A-rate, but also give it to all other members. SECU will then obviously have the best rate for every "eligible" member ( a marketing/PR coup... no costly S-Bowl ads needed!), then ...
C) Restore the sound local lending and collection policies in place prior to "new/new"...
Best of all worlds for every member... and your loan losses will drop by 2/3rds back to the normal range Rememer you're up 300% in charge-offs under "new/new"!
Time to fix your problem and do it fairly. The decline in loan losses will save members @$150 million yearly.
“Moral principles do not depend on a majority vote. Wrong is wrong, even if everybody is wrong. Right is right, even if nobody is right.”
ReplyDeleteFulton J. Sheen
Hate to keep "harping" about escalating loan losses ("CO's" = charge-offs), but it's costing members hundreds of millions of dollars unnecessarily... the "new/new" simply don't like the official facts...
ReplyDeleteYear-ending SECU CO's Ratio Peer CO's Ratio
2008 .13% .79%
2009 .20% 1.16%
2010 .23% 1.10%
2011 .26% .89%
2012 .29% .71%
2013 .21% .52%
2014 .20% .45%
2015 .26% .42%
2016 .33% .47%
2017 .40% .50%
2018 .45% .48%
2019 .43% .46%
2020 .30% .46%
2021 .20% .19%
2022 .35% .24%
2023 .62% .43%
SECU also had LOWER than peer losses in every year prior to 2021 and has had HIGHER than peer losses in every year since under "new/new"... STAY TUNED FOR 2024 RESULTS!
How do the current powers that be explain the new/new terrible numbers in loan losses and charge offs? What is their explanation? Is the board pushing for improvements in those numbers? Is there any sense that just maybe there was something to the original policy of same rate for each member? That the branches were/are full of excellent employees that really do know what they are doing if allowed? That maybe, just maybe, Jim Hayes and Jerry Harmon got it wrong? That SECU was not living in the past? That now SECU is so busy trying to be just like everyone else(keep up with the Jones) that SECU has lost its way? Sure looks like its in a muddle from here....
ReplyDeleteSECU got it wrong and which all started with Hayes
ReplyDelete