Credit Union Lobbyists Relying More on Statistics to Deflate Banker Arguments; Bankers Make Numbers Dance in Their Own Way
WASHINGTON-As banks and credit unions battle it out on Capitol Hill and at the state level, each side looks for numbers to tell their own story. On the credit union side, CUNA's Economics and Statistics Department stands at the ready with data for credit unions to bolster their argument. "Our...
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WASHINGTON-As banks and credit unions battle it out on Capitol Hill and at the state level, each side looks for numbers to tell their own story. On the credit union side, CUNA’s Economics and Statistics Department stands at the ready with data for credit unions to bolster their argument. “Our reason for being really is to provide the support information about the economy and credit union finance,” CUNA Vice President of Economics and Statistics Mike Schenk said. “As a practical matter, the way that translates is we end up spending a lot of time doing public relations and lobbying support.” Recently, he said, his work has “a lot to do with the renewed vigor of the bank attacks.” Schenk explained, “The whole nature of those attacks have shifted quite dramatically over the course of the last couple years and we’ve.been forced to go out and tell the story in different and unique ways to get points across.” As for the bankers’ data, he said, “I’ve seen more and more stuff coming from the bankers that raise my eyebrows.” For example, he held up the data recently released on small bank marketshare showing it is shrinking due to credit unions without taking into account larger banks that are gobbling up many smaller ones. Schenk said his department does not participate in those types of shenanigans. “It’s not something we’re willing to do. We tend to play by the rules. In my experience, historically, you can get away with half truths and fuzzy pictures for awhile, but once people figure that out, they begin to distrust you.” He admitted, however, for CUNA’s part, “Our job is obviously to promote credit unions so we do try to present credit unions in a positive light. But that’s one of the things that makes my job easy because that’s not hard to do.” American Bankers Association Senior Economist Keith Leggett said he begged to differ on some of the statistics he had observed from CUNA. He actually thanked CUNA for putting out its recent Straight Talk publication in response to the ABA’s efforts because, in his view, it brought the bankers closer into the debate. Some of the data in Straight Talk raised Leggett’s eyebrows as well. According to CUNA’s publication, credit union marketshare is unchanged from 1993 to 2003 at around 6%. “One of the things you’ve got to look at, you need to look at the longer term,” Leggett argued. He went back to 1984′s domestic assets held by U.S. banks and credit union assets and compared it with year-end 2003. During that time frame, credit union assets rose 200% when adjusted for inflation, while bank’s domestic assets were up just 40%. Leggett said CUNA is “overstating” banks’ domestic assets in its number. “Credit unions want to make the debate into JPMorgan Chase relative to credit unions,” he stated. In reality, roughly half of banks have assets under $100 million. He reiterated bankers’ latest mantra, “Our whole issue is not with the vast majority of credit unions.the focus is on the new breed of credit unions.” Additionally, Leggett pointed out that Straight Talk offers household income averages by financial institution usage (Bank Only $76,923; Primarily Bank $74,303; Primarily Credit Union $67,475; Credit Union Only $42,664; Unbanked $17,225). The former statistics teacher explained, “Income averages mask distribution of income.” He cited the 2004 American Banker/Gallup survey, which found that credit unions have a better penetration rate (20%) of households with more than $75,000 than with those between $20-40,000 (16%) and under $20,000 (13%). “Economists use statistics like a drunkard uses a lamppost: for support,” Leggett concluded. One of the arguments bankers have made is that community banks compete on a market to market basis. “There are small banks that do compete on the local level and what we try to do is provide information at the local level as well,” CUNA’s Schenk said. Washington Credit Union League Senior Vice President Stacey Augustine remarked, “There is nothing like being able to pick up the phone and get reliable information from a reputable source.” When she needs data to counter banks’ information fast, Augustine turns to CUNA’s economics department. “Having an economist who can produce reputable information is invaluable,” she said, adding that Schenk puts together “numbers based on arguments that were supportable” that she could not do on her own. For example, in the state of Washington, the banks were making claims that credit unions were the largest financial institutions in the state, but it did not include banks’ out of state assets. Obviously, she said, Washington Mutual is larger than credit unions and that blatant misrepresentation causes them to lose credibility. “Invaluable” is how Alabama Credit Union League Vice President of Governmental/Public Affairs and Staff Counsel Will McCarty described having numbers specific to the state’s situation. Community banks in Alabama were spreading their “same old rhetoric” and the league was able to show using numbers from CUNA that the credit unions are not growing at the expense of banks and bank profits are not hurting. In Alabama, banks hold 88% of the marketshare and the average Alabama bank is $1.3 billion in assets. On the other hand, the average credit union is just $58 million. Only 3% of banks are under $20 million, while 67% of credit unions fall under that benchmark. Texas Credit Union League Senior Vice President of Advocacy Buddy Gill agreed statistics are something the state lobbyists “absolutely need in our arsenal.” “It’s something that the banks are able to do really well.CUNA is now in a position to help the leagues do that.” he explained. The national stuff is helpful, Gill said, “but every legislator wants data on the state level and at the district level if possible.” As much as Schenk would like for statistics to be all that is needed in persuading policymakers toward the credit union position, he admits it is not. “I think they’re one piece of the pie.An anecdote can be powerful as well,” he said. “We use them to fill in the cracks to paint the entire picture,” Schenk said, “whereas with some of the bank attack stuff, that is not always the case.” As an example he noted how the bankers constantly like to point to Telesis Community CU’s business lending statistics, when Telesis is in fact one of the most prolific business lenders and is not indicative of the average CU. Schenk admitted that at one time he shared the mentality that “credit unions are taking over the world.” Prior to coming to CUNA in 1992, he worked for the predecessor to America’s Community Bankers, back when it represented Savings & Loans and S&Ls were more focused on depositors like the movie “It’s a Wonderful Life,” Schenk said. Now, history has borne out that credit unions are not taking over the world, he said, and he is glad he has come around. “It’s nice to be on this side of the fence,” Schenk said. “It’s nice to know you’re having a positive impact not only on the operations of this organization and the various state and local organizations, but having a positive impact on the 85 million or so people out there who depend on credit unions as the only real option out there for a democratically owned and operated financial institution.” -
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