RALEIGH,N.C.–The former CEO of State Employees’ Credit Union has sent a letter to the state regulator alleging it has failed to “protect credit union member governance rights” at his former credit union.
In the letter to Katrina Ray, North Carolina’s administrator of credit unions, SECU’s well-known former CEO, Jim Blaine, wrote that “member-owners of state-chartered credit unions under your supervision are at risk of losing their legal and statutory governance rights. This has become a safety and soundness issue for the 3+ million credit union members who hold over $60 billion in North Carolina credit unions.”
In his letter, which is posted on his website where he has regularly challenged decisions by State Employees’ CU, Blaine stated Ray was “not unaware” of the situation at the $55.3-billion SECU, which is the second largest credit union in the world.
Annual Meeting Cited
“Let’s focus on the SECU Annual Meeting: 1) In 2022 (and in all prior years back to 1937) SECU members could speak, offer resolutions and make motions at this business meeting,” Blaine wrote. “2) in 2023 speaking rights by SECU members were restricted and the meeting agenda was altered to eliminate member participation in “new business/old business” discussions. 3) in 2024 the ability of members to speak was eliminated, only non-substantive resolutions were permitted, and the standard business meeting agenda was again curtailed.”
Blaine said that ahead of the 2025 SECU annual meeting a written request was submitted for a copy of procedures for SECU members to submit substantive governance resolutions in advance of the meeting for publication and consideration by the SECU membership.
‘No Procedures’
“No procedures exist,” Blaine wrote. “SECU noted that advance resolutions would not be accepted at the annual meeting and that such resolutions could be submitted only via a separately called “special meeting” of the membership. This further restriction on SECU member governance rights was a novel invention and of course no policies or procedures for such a ‘special meeting’ exist.”
Blaine told Ray that as administrator she is given credit for authorizing these eliminations of SECU member governance rights via the bylaw amendments approved by NCCUD on June 20, 2023. The letter cites the amendment, which Blaine said states that its intent is to “… (iii) authorize the Board to establish upon notice to the membership policies and procedures governing the order of business, format and conduct of the annual meeting.”
‘Explicit Safety & Soundness Risk’
“It would appear that the SECU Board has used your general amendment authority as cover to purposefully curtail the legal, statutory governance and ownership rights of SECU members in their credit union,” the letter states. “This has created an explicit safety and soundness risk for the future of all North Carolina credit union members.
“If as Administrator, you did intend to authorize this abridgement and curtailment of credit union member governance rights; you have created a business entity unique among all insured financial institutions in the U.S. and have authorized governance practices which would be illegal among most public U.S. businesses,” the letter continues.
‘Being Followed Carefully’
Blaine told Ray the “unparalleled and growing impairment of basic shareholder-rights is being followed carefully” by the credit union and banking communities in North Carolina and on the national level, and he urged her to use her authority to act.
SECU Responds
In response to a query from the CU Daily, SECU issued a statement saying, “At SECU, members enjoy robust governance rights. Any eligible member may run for SECU’s Board of Directors, and SECU has taken steps in recent years to make voting easier for every member. Last year, SECU mailed ballots to over 2.5 million of its members, to complement an electronic voting option. Over 90,000 members voted, in what may be the largest voter turnout for any credit union board election in the history of credit unions.
“Members also possess the right, under SECU’s bylaws, to present resolutions to the membership by arranging for a special meeting, and even to overturn the decisions of the Board. Beyond these more formal rights, SECU receives and incorporates feedback from SECU’s Advisory Boards – over 3,000 volunteer members who represent each of SECU’s 275 branches across North Carolina.
“SECU is and always has been a safe and sound financial institution, with robust capital, liquidity, and assets, powered by employees who serve its members with care.”
