Inside Financial Services

A Big Whiff By The Credit Unions

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The conventional wisdom was just certain that, within the banking industry, anyway, the big winner from the Occupy Wall Street fracas would have to be the credit unions. How could they not be? Credit unions and the occupiers have a certain confluence of priorities, after all. The OWS types turn up their noses at the profit motive-and so do credit unions! CUs aren’t big and impersonal (well, mostly) like those evil Wall Street banks! And they’re even kind of like communes, but without the tarpaulins! So it was natural that, once the momentum behind “Bank Transfer Day” got rolling, people would expect that the bulk of the bank transferring that was going to happen would come out of the big banks and into the lovable, down-to-earth CUs.

Except . . . not. The Credit Union National Association initially reported that from September 29 through November 4-the big runup to Bank Transfer Day-the credit union industry added just 650,000 new members, which is basically nothing compared to the 90 million credit union members it already has nationwide. And CUs were said to have added $4.5 billion in savings deposits-a sub-rounding error against the industry’s $914 billion in assets. An underwhelming showing, given all the publicity surrounding the event.

And now it turns out that even those early numbers were too optimistic. Now we learn that credit unions added just 214,000 new members in the month prior to transfer day, rather than 650,000 first reported, and lost $400 million in savings deposits rather than adding $4.5 billion.

Pathetic. The banking industry has a lot of legitimate complaints about the unfair advantages credit unions have. Marketing smarts, apparently, is not one of them.

What do you think? Let me know!

5 Responses to “A Big Whiff By The Credit Unions”

  1. Bored Spitless

    For crying out loud. With everything that’s going on in the financial services industry these days, don’t you have something better to comment on than “National Transfer Day”? Maybe another inspiring article about how brilliant Jamie Dimon is?

  2. Former Bank Analyst

    Good insight. Credit Unions are some of the most poorly regulated financial institutions in the US. We are fortunate that there is an inherent limitation to their size. Weak regulatory oversight in financial institutions leads to the same outcome every time for both the smart guys (MF Global) and the not-so-smart (Texas S&Ls).

  3. Joseph Morabito/

    The difference between a big credit union and a big bank is that the big credit union pays no income taxes.

    When it comes to Life Savings Insurance, NCUA has discouraged member credit unions from complying with generally accepted accounting principles which require an accrual for unfunded life insurance agreements (FAS 60 FAS 97 FAS 120). Nearly all credit unions buy liquidity insurance from CUNA Mutual to cover periodic claims. This type of insurance is not qualified reinsurance as required by the National Association of Insurance Commissioners. As a result, nearly all credit unions have overstated annual income (understating insurance expense) since the beginning of the Life Savings Insurance program.

    NCUA needs to make up its mind as to whether it is a regulatory body or a trade association.

  4. DrRoberts

    The “Occupiers” and their ilk are so befuddled that they were of the opinion that ridding the majors of negative to no net-worth, non cost-effective account holders, was gonna show them evil “banksters” their political muscle. Next up, close down the West Coast and make enemies of dock workers and truckers. With their misguided agenda, won’t be long till they are referred to as representing the 49 1/2 percent.

  5. tony

    I don`t think it did—-alot of people do things when it is convenient for them… as an example, I am changing to a smaller bank now Tony

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