I dunno, I am ok with things being like that. A chapter has to be able to be very selective about its membership in order to maintain overall quality and reputation.
I think legacy is important in that the son of a fraternity brother is more likely to have parental support for joining one himself. It can also sometimes be an indicator of someone who comes from an environment/background that is desirable.
But beyond that, if a guy is not up to chapter standards I don't care how many of his relatives were in my fraternity- he doesn't need to get a bid unless the potential future financial value to the chapter of his legacy relatives outweighs his own shortcomings. Sounds cold, but all part of the idea of running a chapter like a business.
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