At 10:32 a.m. on Feb. 19, Credit Union Journal posted a letter to the editor from a small CU CEO questioning whether small credit unions matter anymore and whether the movement can survive if all the small credit unions die off. Within eight minutes, someone posted a comment on that letter. Three more comments were posted just moments after that. By noon, five comments had been posted. At press time, the comments were still rolling in.

Clearly, that letter, penned by Tom Pinnow, president of County City CU in Jefferson, Wis., had touched a nerve. You can read it on page 6 of this edition of Credit Union Journal under the headline "If Small CUs Die Off, What Happens to Movement?"

A Battle for the Soul of the Movement?

Pinnow's letter passionately demonstrates that credit unions are engaged in a battle for their very souls right now. It's not just the increasing competitive pressure and razor-thin margins. It's not simply the ever-mounting compliance burden. It's not just a question of economies of scale any more.

Several of those who posted comments simply wanted Pinnow to know he wasn't alone, best summed up by Robert Surinak, who wrote: "Amen, I agree 100%."

But perhaps the most fascinating comment came from Allan Ontai. If you've ever wondered what happens to the executive of a small credit union that merges with a much larger institution, one very common answer is that they retire (often one of the reasons the small CU was seeking a merger partner in the first place). But that's not what happens to all of them:

"I don't know the future of small credit unions but with the current generation (X, Y and Z), small money institutions are not even on their radar. How to change that??? That is the $$ future question. Today's generation does not even recognize small credit unions as a viable source (to help with) monetary problems that face these gen X, Y and Zs. Small credit unions will have to come together and differentiate themselves from the large CUs and create their own message and strategic plans. I merged my small ($12M) CU into a medium ($350M) CU and am now working at a $70B bank. I see and hear the difference, and it is real!"

All of these comments come at the same time that NCUA is considering changing the way it defines "small." In 1981, NCUA defined "small" as $1 million. In 2003, the agency raised that to $25 million. Just two years ago, the federal regulator moved it up to $50 million, and now the push is on to raise that threshold to $100 million. And at least one NCUA Board member, Mark McWatters, would move the needle to $550 million — which would be in keeping with federal bank regulators' definition of "small" — but agreed that raising it to $100 million was better than not raising it at all.

McWatters said it was his hope that during the 90-day comment period, the agency would see an outpouring of support to raise the threshold higher than just the $100 million that has been proposed.

It's not that McWatters wants to dilute the definition of "small," — he wishes to create a "kinder, gentler" regulatory environment for the greatest number of credit unions possible. It's not that he's anti-small, it's that he's pro-regulatory relief.

A House Divided

Credit Union Journal has long reported on the phenomenon we've dubbed "The Great Divide." The problem is, we all know what happens to a house divided, don't we? Don't think the banks don't know it, too.

Prior to last Thursday's NCUA Board meeting, a lot of people thought it was going to be something of a snoozer, especially compared to the January meeting, where the agency issued its revised risk-based capital proposal, easily the hottest topic in credit union land in quite some time.

But if the comments at are any indication, that "snoozer" is starting to look more like a sleeper hit — or maybe a sleeper cell.

Editor in Chief Lisa Freeman can be reached at