Recently, I had a lunch conversation with a couple of buddies who work at a bank. We were talking shop when the subject of credit came up. I innocently asked, “What does the bank do when it turns down a customer for a loan?” Specifically, I wanted to know what rights customers have to appeal the decision.
What happened next surprised even me. They laughed at my question. In fact, they went on to sneer and jeer the very notion a customer would be allowed to question a credit decision. One fella gleefully snapped he would never allow a customer to appeal a bank’s decision. “It’s our money and we don’t want credit applicants thinking they can call the shots.”
I sat silent for a moment thinking I should just let it go. Nah. My Credit Union pride got the best of me so I spoke up.
“Well, that’s not how we do things at LGFCU,” I said. “Unlike the bank, Credit Union members are owners of the institution. Our members have a right to appeal and ask us questions. The fact of the matter is the highest loan decision-making body in the Credit Union, the Loan Review Committee, is run by member-volunteers. Any member who does not like how we handled a credit application can have their application submitted to the Loan Review Committee. As President, even I can’t overrule their judgment.”
One colleague asked, “Aren’t you afraid that the credit quality of your loans will decline?” He insisted you need bankers who are loyal to banks making these decisions. I replied, “Our member-volunteers play an important role.” In fact, our loan performance is better than industry average. For members who want a second look, they take comfort in knowing their fellow members may be willing to give them a second chance.
The other fella spoke up and said that’s no way to run a bank. “You are right,” I admitted. “This is no way to run a bank. But this is the perfect way to operate a credit union.”
I’m not sure if I will get invited out to lunch with these guys again. I think I’m on their bad list. To make up, I think I will send them a copy of this column.