WASHINGTON – CUNA’s downward revision of the number of new members who joined credit unions as a result of Bank Transfer Day led to headlines yesterday that included “Credit Unions Eat Crow On Customer Numbers” and “Banks Revel in Credit Union Gaffe.”
But some of the claims being made by critics of the credit union estimations and revised numbers also show that when it comes to data, as Mark Twain is most often given credit for famously observing, there are “Lies, damned lies, and statistics.”
After initially estimating that as many as 650,000 people had joined credit unions as the result of Bank Transfer Day – a figure that was widely reported in the media – CUNA on Monday said the actual number is closer to 441,000. The 441,000 figure refers to members added during September and October, when CUNA estimates that credit unions added 227,000 and 214,000 new members respectively. CUNA has acknowledged that its methodology and hasty desire to release the compiled data led to the overblown numbers. Bank Transfer Day was officially Nov. 5; no membership numbers have been released for November.
CUNA’s backtracking on the numbers led to claims by the American Bankers Association and a report in American Banker, which is not affiliated with the trade group, that credit unions grew by just “one third” of what was originally reported. However, to arrive at that figure means using just the October estimates for new members.
“There is a saying that you are supposed to measure twice and cut once,” says Keith Leggett, a senior economist at the American Bankers Association told American Banker. “They decided to cut without measuring.”
“Clearly CUNA has egg on its face,” Leggett, added. “It arose from a faulty instrument. Who is more likely to respond to the survey? Credit unions that reported membership gains and that is one thing you have to control for.”
Richard Hunt, the president of the Consumer Bankers Association, told American Banker that his group mostly relies upon data from the Federal Deposit Insurance Corp. rather than trying to collect its own survey data. “From what we were hearing, we never really believed the numbers were that high,” Hunt says. “But I take no joy in that the credit unions were wrong.”
Alan Theriault, president of CU Financial Services in Maine, which specializes in assisting credit unions that are seeking to convert to a bank charter, told American Banker, “Credit unions are very optimistic about this whole process of Bank Transfer Day. I think the enthusiasm of that concept and the recognition they were getting in all of the national media just created an exuberance that resulted in numbers looking a little better than they were.”
CUNA Chief Economist Bill Hampel earlier told Credit Union Journal the difference in the initial data and the revised data likely resulted from CUs counting both new members and new checking accounts during the latest CUNA survey of credit unions. “And given there was some ambiguity in the way we asked the question, credit unions could have likely responded for both new checking accounts and new members,” Hampel told Credit Union Journal.
Hampel pointed out that the downgraded growth number is roughly equal to 75% of total member growth in all of 2010. “That is still very healthy growth.”
