As the credit union industry lobbies Congress this week, the American Bankers Association today urged all members of the House and Senate to question the tax-exempt status of the $2 trillion industry. While the credit union industry was created during the Great Depression to provide financial services to those of “small means,” there is no requirement that they serve consumers that are most in need, the association wrote.
Credit unions have now grown into regional and national financial institutions and promote business lines like aircraft finance, and some are using their tax subsidy to pay for Super Bowl ads and NBA stadium-naming rights, the letter said. “These credit unions have strayed beyond the narrow purpose Congress created for them. They’ve graduated, and are essentially banks that don’t pay taxes,” ABA wrote.
The association urged lawmakers to ask credit union industry representatives pointed questions about how the industry quantifies meeting the needs of the community while being exempt from the Community Reinvestment Act. ABA also urged Congress to question why the credit union industry made only 3% of Paycheck Protection Program loans and deployed less than 2% of all program funds.