"How did Mr. Hayes ever arrive at SECU as CEO in the first place?" The hard part about the next few posts is knowing where to start and how to give you enough information to connect the dots....
✅ First, let's check your homework. If you watched the "Inside Job" documentary, then you understand that the economic collapse of 2008 - "The Great Recession" - was the worst U.S. financial catastrophe since the 1930's - "The Great Depression". Millions of Americans lost their jobs, their homes, even their "credit scores". The financial ruin was widespread. Working men and women took the hit. The U.S. financial system came within a heartbeat of total failure. Now, if you're under 30 years old, you probably weren't focused on all this in 2008 and today you might think "Nah, it couldn't have been that bad!". Oh yes it was!
You also learned from "Inside Job" that most of the failure was caused by financial greed, fraud, greed, corruption, greed and federal regulatory incompetence and complicity. If you followed the documentary closely, hopefully you were shocked that no one was punished, no one was held accountable. The corruption and incompetence were too pervasive and reached too high within the financial industry and within the federal regulatory bureaucracies.The "high priests" of finance and federal regulation really weren't too interested in sending themselves to jail. Imagine that!
✅ Among credit unions, the 2008 Great Recession triggered the collapse of the Corporate credit union system. That system failure cost U.S. credit unions @ $6 billion (that was real money in 2008!). SECU members' part of that bill was @ $120 million - real money out of your pockets! So what is the Corporate credit union system?
✅ Background: The Corporate Credit Union System - The corporate credit union system in 2008 was a three-tiered system consisting of one wholesale corporate credit union, 26 retail corporate credit unions , and nearly 7,600 natural person credit unions. The wholesale corporate credit union (U.S. Central Federal Credit Union) provided services to the 26 retail corporate credit unions, while the retail corporate credit unions provide services to natural person credit unions. Retail corporate credit unions provided support to natural person credit unions through the delivery of liquidity, financial, payment, and correspondent products and services.
✅ Huh? Alright, lets translate that! In 2008 most of the 7,600 "natural person" credit unions (like SECU) were small financial cooperatives. In order to increase their "market clout", the credit unions formed local "corporate credit unions" to pool investment dollars in order to earn better rates in the financial markets. Corporates only served other credit unions - no other businesses or individuals. Financial markets would pay a higher rate if together you had say $25 million to invest, rather than say $50,000 as a single credit union. Made sense, a great idea. A cooperative win-win! Most states formed a local corporate, with local leadership and control (in N.C. it was "First Carolina Corporate"). Nationally, one final layer was added - U.S.Central Credit Union - a "wholesale corporate" where the state corporate credit unions further pooled their dollars to gain further market clout. U.S. Central served only corporate credit unions. Life was good!*
✅ Then along came Western Corporate (Wescorp)....with which Mr. Jim Hayes was intimately involved.
✅ And, things began to change....
...what are y'all smiling about???
❓In evaluating CEO candidates, was the Board of Directors aware of Jim Hayes's time as CFO at Wescorp when it went into receivership?
✅ "The Board concluded that the
same leadership qualities that NCUA recognized when it asked Mr. Hayes to navigate Wescorp through
receivership as CFO, stood as concrete examples of an SECU leader "Doing the Right Thing," particularly in the
face of adversity. "
... certain that "this Board" will not try to "duck" accountability for that statement and their decision making, aren't you?
* Questions about the "corporates" or 2008? Ask in comments.
