Yesterday I quoted from an NCUA letter which emphasized directors’ primary fiduciary responsibility is to the members, not the organizational entity.
What happens when this principal duty falls short?
Sometimes dissenting directors will just give up and resign. Other times, the entire board votes to hand over their duties to another credit union via merger.
And the members? Most of the time they just lose interest and take their business elsewhere. But very occasionally, they revolt. That is happening at SECU in North Carolina.
The former CEO Jim Blaine resurrected his blogging skills when he was contacted by current employees and members concerned about the direction of the credit union under a new CEO. The daily blog SECU-Just Asking was began in December 2022 with this note: Caution: Rant in Progress.
The website’s posts of events and opinions would not have become a rallying point if it had not touched on issues of interest to many.
Members Go Democratic
Now that public dialogue has transformed into action.
The primary check and balance on directors’ oversight is voting to fill board vacancies in the annual election.
Rarely is this process effective. For nominations and election procedures are controlled by the incumbent directors who try to avoid any election with more candidates than vacancies.
SECU members have become engaged. The result of the public dialogue is a contested election according to an article from Business North Carolina.
Social Media Mobilizes Members
Members turned to social media to rally support. Here is a Reddit example.
How NC SECU is being turned into an elitist piggy bank (and the narrow window to prevent it)
For almost 100 years the State Employees’ Credit Union (SECU) provided low cost loans and financial services to North Carolina’s active and retired state employees, teachers, and their extended families. SECU historically has been one of the only financial institutions that charges the same low interest rates on mortgages, car loans, credit cards, and financial services to all members regardless of whether they come from a rich, middle income or working class family.
Unfortunately, this approach to treating everyone fairly is changing because of actions by the current SECU Board of Directors. This group – for the first time in the history of the Credit Union – has decided to charge middle class and lower income members and their families HIGHER interest rates so that they can give upper income people LOWER interest rates.
And that’s not all the current board has done. They’ve also:
-Cut services, like the tax preparation assistance program that was available to all members.
-Raised interest rates for the majority of members and their families, while failing to raise interest rates for savings accounts.
-And finally, in an attempt to prevent their opponents from running candidates and entrench themselves in power they’ve changed the longstanding rules and bylaws for SECU Board elections.
This is wrong and we must fight back to save our Credit Union!
The current board is made up of 11 people that no longer represent the interests of the hundreds of thousands of active and retired state employees, teachers, and their families that the Credit Union was founded to serve.
What can you do to fix this?
The board changed the rules to make it extraordinarily difficult for anyone new to serve and to try to silence members’ voices. The board’s new rules require a candidate to get 500 signatures, obtained in person, in 5 days time.
In order to stop this board’s attempt to convert SECU into another traditional bank that looks out for rich elitists at the expense of regular folks, please sign the petition allowing these three candidates who support returning SECU to its historic mission to be on the ballot for the board election this fall.
(the three candidates and brief credentials were then listed)
Again, you are only signing to allow these candidates the opportunity to run for the board, so that we may continue this discussion. If they aren’t on the ballot, there will be NO discussion.
Please go to www.secujustasking.com and request a petition form to submit.
Over twenty comments were posted to this appeal. Some supported, others asked questions. Here is one:
I sense that SECU is currently being run by bankers who don’t understand the competitive advantages the credit union historically had. Banks long ago outsourced much of their lending decision-making to people looking at an application and a credit score on a computer screen. That saved them a lot of money (those local loan officers weren’t cheap), but it created an opening for someone like NCSECU to have an advantage. . .
. . .there’s no question that SECU could have made a lot more money over the years by risk-adjusting lending rates (preferably by something a little more sophisticated than just credit scores), but they were able to keep rates flat, because that fit their ethos as a non-profit better.
I just don’t buy that this is necessary now to keep the institution afloat–I have yet to hear a cogent argument for why this is the case now. It apparently wasn’t necessary in 2008 or 2001, but we’re supposed to believe that rates being hiked back to something more like historical norms is threatening the institution?
Or to put it another way, what have they been doing so wrong lately that they aren’t able to weather this storm the way they weathered storms in the past?
A Test Case
Democracy is a difficult process in all circumstances. American elections are just the most obvious example.
SECU may be the test that illustrates whether the cooperative model of governance can be a real check and balance by members. Can democratic voting be the means to counter the ever present temptation to become an “elitist piggy bank”?