Credit union people are like family to me, but, like family, sometimes there is a need to have a heart-to-heart talk. There is a crisis in our industry, but very few of the people associated with the industry publicly acknowledge it. The traditional credit union model no longer works and will never work again. If we do not take steps to transform the model now, credit unions run the risk of marginalization or elimination.

Since the founding of credit unions, the business model is for credit unions to exist off of the net interest margin. In 2005, the credit union industry's average net interest margin dipped below the operating expense ratio. When a business makes less money than it costs to operate, you can only stay in business as long as the capital holds out. In 2009, the NCUA began to take an additional bite of that capital to pay for the losses to the share insurance fund caused by the meltdown of the investment portfolios of the corporate credit unions.

Credit unions are merging out of existence at the rate of at least 3% per year. This has been true through both good and poor economic times. Our current troubles are aggravated by the economy but not caused by the economy.