The merger debate on the West Coast has heated up! Many SAFE members are actively questioning the financial and economic benefits of this newly proposed creature - SAFE++ or Tukwilapus?
The SAFE Board seems to realize that they've mismanaged this move to extinguish SAFE, by failing to engage SAFE members in the discussion for over a year. The lack of transparency (and abundance of hubris!) by the Board has inflamed opponents. Board panic seems to be growing.
As a last resort, Henry Wirz, the much admired and long retired CEO of SAFE, has been called into the fray with a letter of support [link]. Henry's principal thesis in support is: "
Think we all know that idea is not true. SAFE CU ($4.5 B) is currently one-seventh the size of Boeing Employees' CU ($30B). The advantages of "scale" at Boeing are not apparent as it operates at a much higher cost (3.43% vs 2.59% exp - 32% higher costs at BECU!) and BECU rates on loans/deposits are generally less favorable than at SAFE CU [link]. In fact, SAFE members appear to lose all the way around [link]!
✔ History repeating itself? Mr. Wirz also promotes scale as the deciding factor by referring to his past experience: ""
😎 That "$30 billion credit union" was Wescorp - the largest credit union failure in history.
According to NCUA:
"A. Why NCUA Conserved Western Federal Corporate Credit Union:
WesCorp‘s management and Board of Directors (management) did not implement appropriate risk management practices to adequately limit or control significant risks in its investment strategy "
[Material Loss Review of Western Corporate Federal Credit Union (Opens new window)]
WesCorp began operations in 1969 as the California Central Credit Union,. The field of membership was expanded in 1975 becoming the nation‘s first regional corporate. Prior to obtaining a national field of membership (FOM) in 1999, the FOM included federal and state-chartered credit unions
in Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, Washington and territories of Guam and American Samoa. In 1998 and 2003, mergers were accomplished with Idaho and Pacific corporates."
[Does this kinda look familiar, ringing any alarm bells?]
😎 "At scale" - "The bigger the humbug, the better people will like it." — P.T. Barnum
Doesn’t SECU have a connection with Westcorp? The recent “Gym” who ran out of town back back in 2023?
ReplyDeletehe was RUN out of town ... else he'd still be there ... they love the new/new ...
DeleteBy WHOM may we ask?
Delete
ReplyDeleteExcellent post. Indeed, SAFE and Boeing seem desperate to shape or change this narrative. Dave Roughton, Henry’s, successor, also came out in support of the merger.
Read both of their messages back to-back and note the similarities. It’s quite obvious they were given common talking points. They’re both talking about this return value metric, fees and scale, and that Boeing had some “elite” member service scores? Where is that coming from all of the sudden? Look at their own annual report about how their NPS scores went down in 2025!
It’s obvious that their objective look into the facts is simply regurgitating the Boeing bullet points. Both fail to ask or explain how and why all these wonderful benefits can’t be given to the SAFE members without the merger.
And Mr. Blaine has the mic drop on Henry’s scale emphasis, with Boeing’s atrocious Opex ratio, which is higher than virtually any peer cu. Did he seriously just try to sell this by pretending to understand the benefits of scale of a large CU that failed and brought losses on most west coast CU’s - likely including SAFE and Boeing? That’s akin to the Enron accountant writing a book on GAAP compliance best practices. wow!
Then what’s this member value return thing they are both highlighting? I’m not familiar with it. Is that a reported NCUA metric? Is it a Callahan thing, or is it homemade?
Take a look at today’s auto loan rates.
safe, new, 5.19%, used 5.29%
Boeing, new =5.89%, used 6.19%
These comparisons have been offered before on this blog. I think they are even wider now. today’s rates, but two prior CEO’s are selling the merger because Boeing told them they’re going to have increased value, compared to banks, based on 2024 data that will be three years old by the time the merger closes. Are you f’ing kidding me?
Does Boeing have lower fees? Yes, but:
1) SAFE could do the same thing now. They can afford it.
2) They obviously make up for it with higher loan rates and lower deposit rates, and by their own data, less than 1/3 of SAFE members will benefit from lower fees
I guess Boeing reprices loans. Great.
1) SAFE could do the same now for their members.
2) they pay for the power rates for some by having higher rates for all. Kinda neat as a SAFE member I can get 1/4% off my car loan if my score goes up, I apparently don’t have to ask or apply - it happens automatically. What’s not to like, right? Well, as a safe member I’ll get a 6.19% rate on my used car loan, my scores goes up, and my rate goes to 5.94%, but I’m still paying 75 basis points more than I did before the merger.
Someone needs to explain all this to me like I am five years old. How does this makes sense for SAFe members? It seems clear the current CEO failed to sell this merger to members, but why would the prior CEO’s discredit themselves like this to bail her out? How can they insult the intelligence of SAFE members like this?
https://goldmountaincanews.com/news/372800/a-financial-cooperative-blueprint-why-the-safe-and-becu-merger-stands-alone/
Can Mr Wirz pass his three-word test?
ReplyDeleteFor better or Wirz? Classic! Easily a top 10 best l
ReplyDeleteever line on this blog.