Christmas came early for credit union bashers.
Bankers who questioned new membership data released in November by the Credit Union National Association were rewarded for their skepticism. The trade association said Monday that credit unions added 214,000 members in October, down from its initial estimate of 650,000 for Sept. 29 to Nov. 2. "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. "They decided to cut without measuring."
The CUNA data was widely publicized in news media coverage of Bank Transfer Day and was cited as further evidence of customer frustration with banks, especially large ones.
CUNA said Monday it realized its mistake after collecting its regular monthly data on balance sheet figures and memberships. The new data also showed that savings at credit unions declined by $400 million in October instead of increasing by about $4.5 billion from Sept. 29 to Nov. 2 as originally stated.
"When these numbers came out so quickly, I think we were surprised there was an absolute number," says Terry Jorde, senior executive vice president and chief of staff at the Independent Community Bankers of America. "In the community banking industry, there isn't any way to know exactly what those numbers are."
ICBA took a different route than CUNA to gauge interest from potential new customers who may have switched from big banks. Instead of trying to measure specific gains like CUNA did, ICBA looked at the number of visits to its website that helps consumers find community banks.
From Oct. 8 to Nov. 8, the community bank locator site received more than 10,000 unique hits, up from more than 350 a year earlier. However, these numbers do not specify whether or how many people switched banks.
CUNA said that its mistake stemmed from ambiguous wording in a survey question, selection bias and a failure to define the period that the survey was supposed to cover. "Because there was so much hubbub, we went out with a quick survey to pick up anything between those other surveys. When we came back and got more routine data, we tried to reconcile it and find out why it would be different," Bill Hampel, the chief economist at CUNA, said Monday.
"Clearly CUNA has egg on its face," Leggett, who runs the blog Credit Union Watch, says. "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, said 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."