Opinion from Bill Brooks - activist leader and CEO in credit unions, NCUA regulator, and credit union trade associations
The credit union model had been around for quite some time before it reached the United States. Credit unions were pretty much based on inter-lending amongst people you knew. The model got a big boost when Congress passed the Federal Credit Union Act in 1934 to help provide a source of credit for people of modest means.
Lending to the hoi polloi was not something that banks cared about doing. There were many loan sharks, exploiters of people down on their luck, but not much else. Credit unions were organized around common bonds based on occupation, association and well-defined communities. For about the first 50 years, the model worked. The credit unions, banks and savings and loans all had their niche.
Credit unions worked with each other and never used predatory merger strategies as a means to achieve growth. Things were simple. People had a place to go when they needed a loan and everyone knew your name. Things have changed in the last 50 years for financial institutions. Credit unions for many "rational" reasons seem to have adopted growth for growth’s sake and an abandonment of the common bond.
I have not heard any questions about whether the response is appropriate. I have never heard any public discussions about how well credit unions are fulfilling their mission of making more available to people of moderate means. I have heard chest pounding about how credit union were democratically controlled, cooperatively run organizations. The chest pounding is pure hooey! No greater fraud is put to the public than presenting yourself to be something that you are not! Credit union leadership has focused on competing with banks. No dumber strategy can be wished for.
Competing with banks and the new financial service providers is not the charge for credit unions. The drive for growth which leads to enrichment of the insiders of larger credit unions is killing the goose that laid the golden egg. Providing goods and services that are reciprocal to what banks offer makes you irrelevant. Authorities are beginning to realize that credit unions are different from their public image. The powers that be will come to realize that they have vested powers in people of general goodwill, but not necessarily good sense to direct the affairs of credit unions.
HOW DO YOU RATE SUCCESS?
Credit unions were a strategic solution to problems faced by people of modest means. Not sure they are the strategic solution to today’s problems?The focus on A and B paper loans may or may not expand the loan pool for people of modest means. For them, the more things change, the more they remain the same.
The credit union industry has become irrelevant because we consider ourselves a movement and because we don’t grow enough and offer the products and services banks and Fintechs do. Basically the opposite of what he is saying.
ReplyDeleteTell us you came from a bank without telling us you came from a bank.
Delete8:18 yep, sounds like it. A credit union trying to keep up with banks is ridiculous. Credit unions are not for profit and should be about goodwill and bettering the lives of people with modest means. It is not how big you are, it is about what you do with what you have. -c
DeleteYes, came from a real credit union and bank before that. People say SECU is some kind of unicorn but virtually all the ways it’s different from other Cu’s are negative and bad for members. What a mess new/new inherited.
DeleteWow!!!! the facts say otherwise. Interesting how new/new distorts the new/new reality at SECU.
Delete12:43. And which facts are those? Old/old was myopic, close-minded and made very poor product and technology decisions because of hubris and ego - they thought they knew better than everyone else. When you basically never worked anywhere else, you don’t know what success looks like and you can’t envision doing anything other than what you’ve done before, and you either can’t see or ignore the need to changed. Old/old is the textbook for is basically what is the most damaging belief in business - “because we’ve always done it that way”.
DeleteThe examples of how that thinking set the credit union back and damaged members are countless.
3:44 explain what a "real" credit union is please...
DeleteI'm curious ...
One that is focused on meeting the financial needs of all of their members, and one that doesn’t or size them for good credit, or put them at risk in bad products.
Delete@2:57. Let me help you with that. What should say is " Specialized software that was customized for the unique needs of a Credit Union that placed the Member needs first"....until September 1st of 2021.
DeleteIts unfortunate that the new people brought in could not comprehend the necessity, nor the complexity so they wrote it off with name calling. The new group said the new core would be complete in 18 months. Four years in, there is plenty of chaos but still not even a vendor announced. Who is close minded, myopic, inept and egotistical?
SECU didn't become irrelevant till the new/new showed up.
ReplyDeleteIt was a classic example of fixing something that was not broken. B
DeleteOr maybe we were just telling ourselves we weren’t losing relevance. The data doesn’t lie. Market share was declining long before the “new/new”.
Delete8:27. Exactly the problem - a bunch of people telling themselves a story and not even realizing how broken things were. Kinda have to work at a place that wasn’t broken to know the difference.
DeleteJim Hayes liked using his "Blockbuster" business analogy as a scare tactic. Truth is... the big boys like Bank of American and Citibank use state of the art mainframes like SECU. The real focus should be about treating members fairly. That's why people chose CU's over banks.
DeleteState of the art mainframes that are running a modern core
DeleteState of the art mainframes that allow me to initiate an ACH from my online banking—not have to go to a bank’s site just to deposit or withdraw money from my SECU account
DeleteAWS is modern.
Delete@12:34AM - SECU currently and has always employed a current IBM model mainframe. Might want to stay in your lane.
Delete@1:26 why stay in my lane? you’re saying we own a race car, but we only drive it to the grocery store and church on Sundays?
DeleteOkay, this is a little off-topic (though might be integrity related), but have RO85 retirees always paid the same for family member group insurance as employees? Did that change for this coming year?
ReplyDeleteWhy don’t you ask SECU instead of an internet blog?
DeleteYes, it changed. Medicare eligible retirees are being booted from BCBS coverage to an SECU funded HRA in order to purchase their own insurance. The long term consequences of that decision to retirees remains to be seen and will take years to play out. Certainly it is a significant financial savings for SECU.
DeleteThere is disagreement about whether a long term, decades old promise to retirees has been broken.
7:49. There is no disagreement or broken promise. Sometimes things have to change and there is no contract or promises made.
Delete@11:36 Feel free to argue about whether commitments to retirees were broken but it is an absolute fact that there are disagreements.
Delete11:36 A financial institution should understand the importance of long-term financial planning. Folks spend many years planning for retirement.
Delete7:49 It can be much worse than that if you have dependent(s) and not everyone is eligible for Medicare. Some will see their premiums go up nearly 50% more!
Delete7:59.. ok, so what’s the argument that commitments were broken? Was there a signed legal agreement that got breached? Was a plan changed without the right legal process or authority? Or, even verbally, were the terms “guaranty” or “never change” ever used?
Delete8:25… individuals shoulder the responsibiiity for their long-term financial planning, including, if not especially, contingency planning on health care costs, tax brackets, social sec income, etc. if folks assume and rely on no changes to those things, it’s on them.
Delete1:18 Per ChatGPT, "A reasonable inflation rate to model for health insurance costs is currently around 6–7% annually, based on recent trends." SECU's 2026 plan is projected to be 3.4%. Why would anyone plan on a 50% increase? (see 9:10AM) No wonder why some people never feel comfortable retiring.
DeleteIn the years before retirement, I attended two RO85 sessions, and there were no promises. Going into retirement, I was still struggling to understand the Medicare options. Not having to navigate the risky and scary marketplace was such a relief. Now 3 years later, the search is own. Medicare School (Marvin) on You Tube, Medicare.gov, and other sources have been very helpful in my research. Although I am still waiting to get more information about the HRA, I am hopeful the allocated funds for the HRA will be enough to cover my individual health insurance costs. Maybe SECU employees in the workplace will see lower costs. From what I have learned so far, I should prepare to review my insurance options every year in search for my best plan/price. Good luck to you all! -c
DeleteI don't know the ins and outs of the current plan for retirees, but I do know that in the many years I worked for SECU, the Rule of 85 and the 401k match were things that people relied on when making career decisions. We knew we could have made more elsewhere, but the benefits and the promote from within philosophy had value. Sure no "guarantees" were made, but many were implied and back then, we trusted that we'd get what we'd been told to expect.
DeleteRule of 85 was about peace of mind. Not so much anymore. I'm especially disappointed that the retirees for whom an HRA doesn't make sense yet (due to dependents) are getting hammered by premium increases. Over $3,500 additional per year, in one scenario, while employees aren't paying even a nickel more next year.
DeleteThat’s the problem - relying on things that could change, and in fact we’re likely to. SECU isn’t accountable for others’ poor decisions.
Delete11:13, agree, those were selling features for hiring along with longevity. Longevity went away for new hires in the 90s (I think). I sacrificed that benefit to work peak time for a few years, but no regrets. The new HRA plan has yet to go live, so as a poster noted earlier, the consequences are unknown. In any case, the Part D $2K out-of-pocket cap plus the rising cost of life-saving drugs are driving health insurance companies to make changes or go out of business. -c
DeleteBlame shifting seems to be the norm these days...
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