KENNEWICK, Wash.–A “proclamation” issued by a group of small credit unions to the country’s CU trade associations and leagues is calling on the groups to provide greater representation from smaller CUs, asking that the groups “reprioritize” a number of things, and suggesting that smaller CUs will simply go it alone if their needs aren’t being met.
In the letter from the Endangered Small Credit Union Defense (ESCUD), which just announced two new milestones, Doug Wadsworth, president of Tri-CU Credit Union and founder of the organization, said he was writing to the CU associations on “behalf of a growing coalition of small credit unions who are deeply committed to the cooperative mission this movement was founded on. Our organization, now endorsed by credit unions across multiple states and supported by many more, exists to ensure that the smallest institutions in our ecosystem remain viable, visible, and valued.”
‘Cooperation, Not Competition’
Wadsworth told the associations the American credit union movement was established on a simple but transformative idea: that working people could pool their resources, govern themselves, and gain access to fair and affordable financial services through cooperation — not competition.
“The earliest credit unions were small, local, member-led, and deeply rooted in community needs,” the letter states. “Their strength came from close relationships, trust, and democratic governance. Their purpose was not to scale endlessly, but to serve their memberships and communities responsibly and sustainably. Small credit unions remain the most faithful expression of that founding vision.”
‘Operating in Different Worlds’
But that is no longer true, according to Wadsworth, who said the “context has changed.”
“The operational realities of a $50M credit union and a $10B credit union have diverged so dramatically that they now operate in different financial and regulatory worlds,” the letter states. “Even when regulations di er by threshold, their impact is disproportionately heavier on small institutions, and the broader agenda is often shaped around the capacities of the largest.
“This is the tension ESCUD is elevating, with the belief that the movement is healthiest when all parts of it are seen and supported,” the letter adds.
The Challenge Facing Small Credit Unions
ESCUD told the association leaders that small credit unions are struggling under compliance obligations created for institutions larger than themselves.
“Requirements like CECL, HMDA reporting, NMLS licensing, BSA standards, and dozens of others, impact institutions under $500M in ways never intended by policymakers and which cripple small credit unions already struggling under increased competitive pressure,” the letter reads. “Meanwhile, consolidation continues at a rapid pace, narrowing the diversity of our ecosystem. Every time a small credit union disappears, a community loses a voice, members lose choice, and our movement loses part of the identity that gives meaning to our tax-exempt status. In addition, the public generally perceives large credit unions as indistinguishable from banks, which carries alarming implications for the future of our tax exemption.”
No one’s Fault
The letter states the trends are not the fault of any one group but argues “they are a sign that the balance of our movement has shifted. ESCUD’s goal is to ensure this reality is finally recognized in the national conversation, and that the regulatory environment is changed to reflect it.”
The Ask
According to ESCUD, in order to restore balance and protect the diversity and integrity of the movement, it is asking the trade associations to re-prioritize as follows:
A Rebalanced Advocacy Agenda
“Direct national and state advocacy toward small credit union regulatory relief as a top strategic priority, not an occasional talking point,” the letter states.
Tiered & Scale-Sensitive Regulation
“Develop and champion exemptions and right-sized requirements for credit unions under $500M In assets, to correct disproportionate compliance burdens that are suffocating our small credit unions,” the letter urges.
Increased Representation in Governance
“Ensure small credit unions have meaningful and proportionate seats on boards, councils, and policy- shaping committees, to ensure our unique needs are properly prioritized,” the letter requests.
Equity in Influence
“Consider measures such as dues caps or governance safeguards to prevent the largest credit unions from overshadowing the collective voice of small credit unions,” the letter reads. “Consider the structural inequity that can arise when the membership dues of a single large credit union outweigh the dues of all the small credit unions combined.”
Preservation of Cooperative Identity
“Publicly champion the value of small credit unions as essential evidence of cooperative purpose, and the very foundation that underpins our tax exemption and differentiates us from banking,” the letter states.
Prepared for Reality
Wadsworth said ESCUD and the credit unions it represents remains committed to partnership, but they are “also prepared for the reality that the small credit union community is organizing its own support systems, networks, and shared advocacy structures. If existing associations choose to join in this renewal, the movement will be stronger for it.”
Should the associations opt to ignore ESCUD’s requests, the letter said the “momentum among small credit unions to align with one another will continue, regardless. This is not meant as a signal of division, but a reflection of where small credit unions find themselves today. As the segment of the movement that is most at risk, organizing is not optional for us; it is the practical path required for our survival and for preserving the cooperative model for generations to come.
“When small credit unions thrive, the entire movement thrives. We ask you to stand with us in that work,” the letter adds.
