How to Cost Your Financial Institution a Bunch of Customers in Two Easy Minutes

Submitted for your consideration: Bob Morgan, CEO of the North Country Federal Credit Union. Well, he was as of this writing.

Morgan was the only witness in Friday afternoon’s hearing on public sector pension reform to play the Ebenezer Scrooge role, talking up the urgent need to stick it to state and school employees. All the other witnesses were teachers, state employees and their supporters, all urging the Legislature to hold the pensions harmless.

Morgan’s pro-reform pitch makes sense coming from a member of the Vermont Business Roundtable’s Pension Reform Committee, which he is. But it’s awfully risky for the leader of a financial institution where many teachers and state workers keep their money. After his testimony, Twitter got lit up with calls for people to close their NCFCU accounts.

And eventually, one Twitter sleuth discovered an article describing the generous custom-tailored retirement plan Morgan received from the NCFCU Board. Made it look like a clear case of Steak and caviar for me; hardtack and Alpo for thee.

More on that in a moment, but first, let’s revisit Morgan’s testimony.

“The status quo is not viable or sustainable,” Morgan said. “It reminds me of the products that were created and caused the financial crisis, including negative-amortization mortgages, where you pay into something only to see the balance rise and it leads to a disastrous end.”

Wow. That’s… uh… something.

Comparing the state’s pension plans to the hypercharged housing bubble that led to the financial crash of 2008-9? Harsh, man. The crash was the result of Banks Gone Wild; the pension plans were financially sound until Vermont’s political leaders decided to underfund them for about 15 years running. They’re not at all comparable.

Morgan spent the rest of his allotted two minutes talking about the dire consequences to “our bond rating,” the likelihood that we would have to “take money from services that Vermonters need,” whereas cutting pension benefits and hiking employee contributions would “create the path toward sustainability for the system, and that will, in the end, benefit everybody.”

In the aggregate, that is. It sure wouldn’t benefit future pensioners, who would have to pay higher contributions for lower payouts deferred for longer, and assume the financial responsibility for future fund mismanagement.

What Morgan didn’t mention, or even hint at, was the idea of saving the system by creating a new revenue stream, such as an income tax surcharge on top earners (possibly including Morgan himself) or legalized sports gambling or cannabis or you name it. No, his entire testimony assumed the present financials are set in stone.

Now, let’s take a look at the privileged perch from which Morgan preaches belt-tightening for the great unwashed.

I couldn’t find executive pay figures for NCFCU, but CU Management magazine does an annual survey on the subject. In 2020, the median base salary for a credit union CEO was $388,989. But that’s not all; the median salary plus bonus pay was $442,217. And the median total compensation (pay, bonus, perks) was $458,515.

Morgan’s pay is likely lower than that, since NCFCU is smaller than the median credit union. But I think we can safely say he’s a few tax brackets above public school teachers and state employees.

As for that pension… CU Management described it — glowingly — a couple of years ago.

“In our discussions, it became apparent that my financial priorities weren’t solely based on retirement,” Morgan recalls. … [the compensation committee developed] a reward and retention plan based on Morgan’s life stage and priorities.

Morgan says the committee “really dug into the weeds of the design of these plans, so that they thoroughly understood all the mechanics and options before making a recommendation. The plan was very well designed.”

He went on to wax philosophical on customized pensions.

“If you look at simple psychology, the value of anything you’re offered is a combination of the dollar amount and the immediacy of the reward,” Morgan says. “There’s a tendency to discard rewards that are too distant. The value of having a compensation plan (with disbursements) staggered at interims definitely makes it more meaningful.”

How about the psychology of pulling the rug out from under thousands of workers who bargained for their pensions fair and square? How about the psychology of making their retirements less generous and less secure? How about the psychology of forcing them to pay more for a lesser return — through no fault of their own?

The combination of Morgan’s eagerness to devalue public sector pensions with the bragging about his bespoke nest-egg is hard to take. If I had accounts at NCFCU, I’d be looking around for somewhere less tone-deaf to do my banking.


4 thoughts on “How to Cost Your Financial Institution a Bunch of Customers in Two Easy Minutes

  1. Walter Carpenter

    “Made it look like a clear case of Steak and caviar for me; hardtack and Alpo for thee.”

    I’m sure that the state workers and teachers who are, or were, foolish enough to their money into his bank, are financing this man’s “steak and caviar,” while he wants to screw them to get it. Time to put this man out of a job and for the state employees and teachers to start demanding their money back from his pensions.


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