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Stop the Credit Unions

Congress Should Eliminate the Tax-Exemption for Credit Unions

When credit unions were originally created by law, they were granted a federal tax exemption because they existed to serve those of modest means sharing a common bond and who would otherwise not have access to credit. Today, many credit unions are virtually indistinguishable from tax-paying community banks. Not only do these credit unions offer many of the same products and services as tax-paying banks to the same customer base, but many credit union customers share only the most tangential relationship to the community that their credit union purports to serve. This is especially commonplace with the larger, growth-at-all-costs credit unions. They flaunt these abuses of their original charters freely, acting as tax-free, multi-billion dollar institutions with aggressive promotional campaigns to draw in as many new customers as possible regardless of their relationship to the credit union.

Congress is currently evaluating our tax code for reform in all areas. The credit union industry’s costly and controversial tax exemption is one of many exemptions being reviewed for elimination. As Congress moves forward on reforming the tax code, the credit union industry’s costly and controversial tax exemption continues to be on the table, and should remain in serious consideration for elimination to help alleviate the burden on American taxpayers.


Talking Points on Eliminating the Credit Union Tax-Exemption

September 2013 Kies/Ely Report Finds Credit Union Tax Exemption Unjustifiable

Finer Points Blog Post calling for repeal of the credit union tax exemption

Letters to Congress on the Credit Union Tax-Exemption

Oppose Credit Union Member Business Lending

Undaunted by their unsuccessful push for a higher business lending cap in the previous Congress, the credit union industry has wasted little time reintroducing member business lending legislation; deceptively recast as the Credit Union Small Business Jobs Creation Act. Introduced again in the House by Reps. Ed Royce (R-CA) and Carolyn McCarthy (D-CA), the bill (H.R. 688) raises the cap on member business loans that a credit union can make to 27.5% of assets, up from 12.25. At the present time, only the House version has been introduced. ICBA expects a Senate version to be introduced in the future, and will update accordingly.

Contact your lawmakers and make sure they know that your bank stands firmly in opposition to ANY expansion of credit union business lending powers.


Credit Union Member Business Lending Advocacy Resources

Supplemental Capital for Credit Unions

Credit unions are again pushing the boundary of the nonprofit, tax-subsidized credit union business model to unfairly compete with banks with the introduction of the Capital Access for Small Businesses and Jobs Act (H.R. 719) by Reps. Peter King (R-NY) and Brad Sherman (D-CA). H.R. 719 directly undermines the basis of the credit union tax-exemption by allowing a credit union to issue equity, turning them into, in part, investor-owned corporations with an obligation to assure shareholder profit — except that they will still not pay taxes.

Raising supplemental capital allows credit unions to expand like any for-profit entity. But they are not the same as any for-profit entity, a distinction that is codified in federal law. Combined with their continued push for greater member business lending authorization, investor capital will give multi-billion-dollar, tax-exempt credit unions the opportunity to stray further into riskier commercial lending ventures – something never intended when they were given tax-exempt status. ICBA categorically opposes this legislation. Make sure that your lawmakers are aware that the community banks in their districts and states vehemently oppose this legislation.


Supplemental Capital for Credit Unions Resources

ICBPAC, a top financial advocacy political action committee, contributed $1.8 million to federal candidates for the 2011-12 election cycle, strengthening the community banking industry’s reputation in Washington. Supported by thousands of community bankers, ICBPAC is a vital part of Be Heard.

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