This debate over regulatory enforcement has raised an important issue: the value of small credit unions. One of the more irksome things I hear in the credit union community is to save the small credit unions. Why? Just because they're small? That doesn't cut it.

As Kirbydog9 wrote in comments responding to our story on the dust up, small credit unions are “losing market share because of changing economic, cultural and demographic realities. Forty years ago small credit unions flourished serving disaffected minorities, rural areas and people of modest means. While these groups may still exist, cultural changes, virtual delivery channels and a far broader array of products and services provided by large financial institutions have filled much of the void small credit unions previously inhabited.”

Financial institutions in general have struggled to deal with the nontraditional competitors such as online banks and payments providers and others that use the infrastructure the traditional guys built. Someone took advantage of your hard work and made the business model cheaper and faster. So what are you going to do about it?

Online banking is not an extra. It's old school. If you're not thinking mobile, or preferably already there, you're toast. If you're not leveraging help from the NCUA, which it does offer, your league, credit unions and others, you're in trouble.

If a credit union is unwilling to honestly look at its business and see where improvements and efficiencies can be made with disproportionately high capital that's not being put to good use, then it's time to get out of the business.

If a credit union and its executives are nimble and constantly working to improve their members' service the way members want to be served that's one thing. But some are stuck in a this-is-the-way-we've-always-done-it attitude, or board members want to maintain that status symbol, or CEOs are just waiting out retirement.

The credit union is bigger than any one person or its employees. Acknowledge the members' needs and wants. They won't deal with 1950s services at bankers' hours forever.

As Kirbydog9 put it, “Most readers of this article believe small credit unions are an important cog in the credit union industry, but reminiscing over their golden years and casting aspersions on federal regulators is counterproductive. Small credit unions need to understand the changing marketplace and collaboratively redefine their business models if they hope to remain relevant.”

There are some out there providing small credit unions with assistance, such as CU*Answers and the National Federation of CDCUs, as well as the NCUA, for those who will take it.

Those small credit unions that will not rely on the cooperative roots of the industry will fail because they aren't maximizing the value of being a credit union. Sometimes it is in the best interests of the industry and credit union members to merge.

Small credit unions that are niche players and exhibit strong business sense will have the best chance of success, but if they don't survive, that's life. Businesses shut down all of the time. The industry can't save the small credit unions just because they're small. It doesn't make sense.

Politically the large ones like to hold up the smaller ones and plead, “Please don't heap more regulations on us.” Smart credit unions see the value in that and should make prudent business decisions about whether or which smaller credit unions they may want to assist.

The NCUA is not putting credit unions of any size out of business. Regulatory oversight is the cost of doing business. Competition is changing the demographics and industry culture. As @eloquentonline wrote in a Twitter discussion, it's economic Darwinism. “CUs feign a collective effort, do they also c a collective destiny?”