“SAY IT AIN’T SO JOE, IS IT?”

That’s what Hugh Fullerton, an AP writer, wrote of a young kid who approached Shoeless Joe Jackson as he left the courthouse in the wake of the Chicago Black Sox cheating scandal of 1919.

I and several of my friends find ourselves saying basically the same thing in the wake of Navy Federal Credit Union being fined $28.5 million by the Consumer Financial Protection Bureau (CFPB) for illegal collection activity covering a period of two and half years.

It is important to note that, according to the Washington Post, “Navy Federal did not admit wrongdoing in that statement (their press release), nor in its signed agreement with the CFPB. But in the document signed by Cutler Dawson, Navy Federal’s president and chief executive, the credit union stipulated, “that the facts described in Section IV of the Consent Order will be taken as true.”.

In other words just like Wells Fargo, Navy agreed to pay a large fine but refuses to say they did anything wrong. The CFPB is not so circumspect. Indeed, they found that Navy Federal:

“Falsely threatened legal action and wage garnishment,” by writing to 193,000 members but only following through on their threats 3% of the time.

“Falsely threatened to contact commanding officers to pressure service members to repay,” their bills. They only sent 115 of those letters, but they didn’t contact a single CO; even for those who failed to pay!

“Misrepresented credit consequences of falling behind on a loan.” They told members they would find it “difficult, if not impossible” to obtain additional credit because they were behind on their loan. But the credit union, “had no basis for that claim, as it did not review consumer credit files before sending the letters.”

“Illegally froze members’ access to their accounts … about 700,000 accounts after consumers became delinquent on a Navy Federal Credit Union credit product.” It is outrageous that 36,000 members were 5 days or less, past due when their accounts were frozen. It is beyond the pale to even assume that these members could have been notified before the action was taken. Another 480,000 were 16 days or less, past due. The freeze affected access to Federally protected benefits such as Social Security and Veterans benefits. The account restrictions also prevented consumers from having Social Security Administration verification requests processed.

In my career I worked with many regulators to include the CFPB. I can assure you that they don’t call something illegal unless they believe it to be. I would also note that threatening legal action, wage garnishment or contacting a Commanding Officer unless you actually intend to take those actions are considered, not just by the CFPB, but by The Federal Trade Commission as well to be unfair, deceptive and abusive trade practices. The FTC has previously taken action in a similar case. So, this is not an overreach by the CFPB.

Navy Federal admits that the facts are accurate but just like Wells Fargo they refuse to admit they did anything wrong. Except, of course, they paid nearly $30 million to settle the case. Unlike Wells Fargo this is a member owned institution. So this was the member’s money that they spent.

I have to tell you that all of this was shocking to me. I have known the leadership at Navy for a very long time. This was a credit union that truly cared about its members and most specifically about its military members. In the past they have always made every effort to take proper care of the members always going above and beyond in my opinion.

That, for me, is what makes this whole situation all the more egregious. It’s not that they erred. “Stuff” happens when you run a large company. But, just as with Wells Fargo, while they have nice words in their annual report; Navy wants to, “be the most preferred and trusted financial institution serving the military and their families.” In the end it is just BALONEY!

I say that because just as I said with regard to Wells and Mylan, their words and their actions do not match up. The credit union had to spend a lot of money to settle this problem. They weren’t simply settling a small nuisance suit. If for no other reason than that, they owe the membership, the owners of the credit union, an apology because Executive Management, the legal and audit staffs all failed their membership. Notably, but not surprisingly, the Board of Directors has been just as silent as the Wells Fargo Board.

The CFPB notes that, “No credit union executive or staff member was punished for the many transgressions or even tutored on proper conduct”…. Navy Federal “lacks documentation that any employees were disciplined, reprimanded, or subject to additional training.”

HELLO? Is anyone home at NFCU? Have they read anything about the mistakes Wells Fargo and Mylan just made in failing to accept responsibility for their actions? Or are they just like those firms and their collective corporate hubris is simply too great to be able to say we were wrong or even that we are sorry.

If you want my trust, I for one, need to know that when things are at their worst you will do the right thing; that you will admit your errors and stand up and be counted. Saying the facts are accurate but we won’t admit we were wrong, but we’ll pay tens of millions to settle is not, in my view, the mark of an organization with character. If a firm has no character how can it be trusted? It’s really that simple for me.

So as a member of Navy Federal, which I am, with a substantial amount of savings there I’d like to hear from the Board, not just the CEO. First, I’d like to understand how no one is accountable and responsible for events that lead to a material fine. If a teller lost $2850 they would be fired. That’s a fact. Does this principle stop once you get past the line employee level?

Second, I’d like to understand what, if anything, the Board is going to do about bonuses paid out over the last 30 months when all of this took place. Do we spend all that money to settle but everyone gets to keep their bonuses?

Third and this only came about because I looked at their annual report and while it isn’t relevant to the CFPB findings it is highly relevant to the corporate character of Navy Federal; I’d like the Board to explain how the entire 2015 Board of Directors happens to be all white males. That is not reflective of their membership nor of the military and I would argue that a firm lacking in diversity in the 21st century has no character.

Short of those answers someone would need to explain to me why any of us should trust Navy Federal Credit Union.

Dr. Harvey Frommer, author of many books on baseball wrote of the Black Sox scandal, “we are left with a baseball story that will not go away … It is still with us because of the lingering sense … that the ignorant were duped by the clever, that the powerless suffered and the strong prevailed….”

I truly wish Admiral Dawson could say it ain’t so, but the arrogance Navy is displaying by refusing to take responsibility and accountability for their failures places him and the Board in the exact same camp as Wells Fargo and Mylan.

When will they ever learn?

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