Issue: The Credit Union Mission to Serve “People of Modest Means”

Credit unions were created and granted a substantial tax exemption to serve “people of modest means” by providing credit for “provident purposes.” However, fewer than 20 percent of credit unions are physically located in an economically distressed area and only 27 percent are in low- and moderate-income (LMI) areas.

Question for Credit Union Attendees:

  • What are the costs to the public of the loss of federal and state tax revenue from the credit union tax exemption and to LMI households from the credit union exemption from Community Reinvestment Act obligations?
  • Credit unions were allowed tax-exempt status to serve “people of modest means.” What is the average income of your typical credit union member?

Issue: Credit Union Acquisitions of Community Banks

In recent years, there has been a spike in credit unions abusing their tax-exempt status to acquire taxpaying community banks, which removes a trusted, local lender from the community while limiting consumer choice in the financial services marketplace.

Question for Credit Union Attendees:

  • How often do credit unions buy banks?
  • When a credit union buys a bank, is it truly a free-market transactions? A credit union is tax-exempt; a bank is taxed. How much of an advantage do you think that gives you? What happens to replace the lost tax revenue when a credit union purchases a taxpaying bank?
  • Do you think bank purchase transactions are true to your mission or the purpose of your tax exemption?
  • How much does your credit union pay in federal income tax annually?