On 'Truisms,' ID Theft, Wrong Kind of Awareness, & More
Around the Credit Union World in 80 Paragraphs or less...
* The Filene Institute's most recent research release slid somewhat under the radar, but a copy of it should be in the backpocket of every person lobbying Congress or their statehouse.
That's because there's a "truism" that's been mouthed so often by the banking industry-not to mention reported so frequently-that it's become "common knowledge" even though it turns out it's untrue. But as college football analyst Lee Corso would say, just like so many other truisms, such as heat causes lightning during the summer time and that no two snowflakes are the same, "Not so fast, my friend."
You've likely heard, been told or even repeated yourself the "fact" that on average, credit union members are more affluent than bank customers. For years the banking industry has been arguing that this is just another sign credit unions have lost their way and abandoned the little guy they were formed to serve. Credit unions responded by arguing that of course "average" income numbers are higher, since employment has long been a linchpin of credit union membership.
But as the story reported earlier by The Credit Union Journal illustrates, analysis by the Filene Research Institute has found that people who exclusively or primarily use credit unions earn less than those who exclusively or primarily use banks. Blending various categories produces a "clouded view" of how households use financial institutions, says the Filene Study. Specifically, it pushes down the income number for bank customers, and pushes up the same data for credit union members. The study found that consumers who only use a credit union average $34,948 annually, vs. $37,004 for those who only use a bank. People who said they primarily use a CU averaged $52,423 annually, while those who said they primarily use a bank made $60,646. If you want more info, visit www.filene.org.
* While checking into a Marriott-property hotel recently in Orlando, I was given an electronic key that had no problem opening the hotel room. The bigger problem was that there was already someone else in the room (and they weren't inclined to share). That's the fifth time in the past 10 years I've been checked into an otherwise occupied hotel room. Upon returning home I found a new box of checks in my mailbox. That was also terrific, except the checks were intended for someone else a half-mile away from my house. I just can't understand how all this ID theft keeps occurring.
* The interest in credit union conversions is no longer limited to credit unions, by any means. That became clear to me recently when an acquaintance I know only in passing approached me with the question, "Hey, what can you tell me about credit unions?" His interest had nothing to do with opening a checking account or getting a loan from one of America's financial cooperatives. Rather, he wanted to know if I might have any inside knowledge on which CU would next convert to a bank. It turns out this person is an avid stock speculator, and he told me he had noticed in several Internet chat rooms he monitors that there was a lot of chatter about the profits to be had from riding up the stock appreciation ladder of credit unions-turned banks. After I told him I had no knowledge outside of what The Credit Union Journal has already reported, he said he was going to be opening as many $25 accounts at credit unions as he could so that he would be able to take advantage of any future IPOs.
* Keenly observed by WesCorp's Dwight Johnston during a recent NAFCU meeting: "My session is entitled, 'Developing Strategies in Uncertain Times.' I've been in the business of interest rates for 30 years, and frankly, there's never been a certain time." Later he added, "The Fed always removes food and energy from the core Consumer Price Index, since none of us ever use those."
* Are you a CEO or manager thinking ahead to an upcoming board retreat or annual meeting, and unsure what to give your volunteers as a gift? Here's a thought. During a recent meeting in Texas, the Filene Institute's Mark Meyer was speaking and he asked a large room full of board members how many were familiar with hip-hop star 50 Cent. Incredibly, not a hand went up. Yet 50 Cent seems a natural to me for the average CU volunteer. First, he was shot nine times in 2000, so he understands first-hand the reality of robberies. Second, both his name and recent works (his first hit was "Power Of A Dollar," his breakthrough CD was "Get Rich or Die Tryin") show clear financial ties, and finally, his real name is Curtis Jackson, so he can offer an example or two of identity-related issues. So buy a box of CDs for the board today; I'm sure you'll thank me later.
* Finally, some good news. Credit unions took it on the chin last year in the American Banker/Gallup poll, registering a significant decline in the number of members who said they were "very satisfied" with their credit union. The early word is that credit unions will see a rebound when the data is officially released this year.
Frank J. Diekmann is Editor of The Credit Union Journal. He can be reached at fdiekmann