There are misconceptions about the credit union industry running rampant in Washington, D.C. Many want Congress to impose a tax on credit unions, claiming they have become “too big” or lost sight of who they are. But size isn’t the measure of a credit union, large or small. The exemplary service of these not-for-profit financial cooperatives is what sets them apart, and that hasn’t changed.
It’s a conveniently overlooked fact that banks hold 91.2% of all U.S. financial services assets. Credit unions hold just 8.8% of assets nationwide, but that relatively small percentage encompasses 43% of all Americans who depend on credit unions day in and day out.
Efforts to eliminate credit unions’ not-for-profit status are just attempts to eliminate credit unions as competition. Consumers will be left with fewer choices as a result: banks are responsible for 92% of new banking deserts since 2019, while credit unions are responsible for 36% of cured deserts. Since 2014, rural areas have seen credit unions open 282 branches while banks closed more than 4,200.
One out of every four North Carolinians is a member of State Employees’ Credit Union, which has served the state for nearly 90 years. It employs more than 8,000 people, including 750 Accredited Financial Counselors. Since 2004, its foundation, which is funded by a low, $1 monthly maintenance fee, has committed more than $300 million in grants, loans, and scholarships to support state residents. After Hurricane Helene, it provided nearly $9 million in disaster relief for Western North Carolina.
For almost 100 years, Chicago Post Office Employees Credit Union has met the needs of postal workers and their families—now serving 5,000 members. As a low-income designated financial institution, many of its members count on it to help them survive by offering credit-builder and other small-dollar loan programs to ensure affordable access to credit. For several years, its small staff has partnered with local organizations to deliver financial education and offer college scholarships.
No matter a credit union’s size, the heart of its mission is the same: people helping people. This people-first philosophy imbues all credit unions regardless of asset size or any other measure. Credit unions meet people where they are to help them save and get affordable loans and trusted financial guidance — critical programs that encourage lifelong financial stability.
Credit unions of all sizes pay a wide range of taxes: Property, sales, real estate, and payroll. They don’t pay the federal income tax on profits. Instead, their profits are returned to members by way of better rates on loans, lower fees for accounts, and innovative services. A credit union’s money is its members’ money that is invested in ways to strengthen the people and communities it serves.
When banks close branches, credit unions step in. They offer personalized counseling to help members save for a rainy day and thrive financially. They deliver loans to the people who need them when they need them. Consumers who financed auto purchases through a credit union saved between $1,000 and $12,000 over the life of a typical 72-month auto loan. Low credit score consumers save the most, including deep subprime borrowers who banks traditionally ignore.
A new tax on credit unions would hurt bank customers, too. Based on a recent independent study commissioned by America’s Credit Unions, a 50% reduction in the credit union market share would cost bank customers an estimated $22.8 billion a year in higher loan rates and lower deposit rates. All due to the loss of credit union competition. Changing the credit union tax status would cost the U.S. economy $33 billion in lost income tax revenue over the next 10 years, reduce the GDP by $266 billion, and eliminate 822,000 American jobs.
TRUMP TARIFFS COULD NEGATE TAX CUTS, FREE MARKET ECONOMISTS WARN
Credit unions are a check on banks to ensure all consumers benefit from competitive rates and don’t face skyrocketing fees. They serve communities that banks have left behind. They provide more than $35 billion in total consumer benefits — for both members and nonmembers — with $297 billion in total economic impact.
Congress should help credit unions of every size meet the needs of their constituents that banks don’t.
Leigh Brady is the President and CEO of State Employees’ Credit Union, the second largest credit union in the country.
Deborah Fears is the President and CEO of Chicago Post Office Employees Credit Union, one of the smallest credit unions in the Midwest.