Credit unions should not exist merely because they idea of them gives people the warm fuzzies. The idea of credit unions is awesome, but if they are not fulfilling member needs then something needs to be done. Barring catastrophic local or SEG problems, if credit unions are truly serving their members, they would not be losing members.

Part of the reason the financial services industry is in the state it's in is because there were too many lenders nudging them to get creative with the structure and underwriting of loans. Consolidation in the financial services industry is a good thing. If there are 50% of the banks and credit unions remaining 10 years from now that there are today, that's a good thing. If there are more than 5,000 credit unions left by 2015, I'll be surprised–and dismayed.

SAFE Credit Union President Henry Wirz recently shared an analysis he had recently done of the situation as it pertains to California. The 242 California CUs with less than $50 million in assets have the highest capital level at 11.20%, but in aggregate have lost over 20,000 members in the last three years and have a lower return on capital than credit unions $50 million to $500 million in assets or CUs over $500 million in assets. The 146 mid-size CUs have 9.36% capital but have in aggregate lost over 43,000 members in the last three years and have only a slightly higher return on capital than the smaller CUs. The CUs over $500 million have combined capital ratio of 8.87%, the least capital capacity to support future growth, but this group grew by 506,109 members over the last five years.