Credit unions have strayed far beyond their purpose. Imagine if a non-profit organization like the Girl Scouts of America bought naming rights to an NFL stadium. The public would be outraged to hear about a charitable organization using its resources to sponsor a sports stadium. Yet, when numerous credit unions across the country do it, no one blinks an eye.
In recent years, credit unions have evolved from their original purpose and now resemble large financial institutions. Americans expect fairness, transparency, and accountability—especially from organizations that receive taxpayer support. During the Great Depression, federal credit unions were established to serve communities with modest means. However, they have significantly expanded beyond their original statutory mission. It is time to stop pretending they are simply humble community partners; they should be held to the same standards and responsibilities as other financial institutions, and Congress has the opportunity to enforce this in the upcoming tax debate.
Today, credit unions have ballooned in size and scope. Navy Federal Credit Union, for instance, has over $170 billion in assets. That’s larger than many regional banks—yet it pays no federal income taxes and avoids the transparency requirements other tax-exempt entities must follow. Unlike banks, federal credit unions don’t file IRS Form 990s, a basic disclosure expected of non-profits, including churches and private schools. That means the public has no window into executive salaries, lobbying expenditures, or how these tax-exempt giants actually serve the communities they claim to support. Amazingly, unlike other non-profits, federal credit unions do not even have to pay unrelated business income tax (UBIT).
In 2020, the Trump administration, through the Office of the Comptroller of the Currency (OCC), proposed reforms to the Community Reinvestment Act (CRA) to improve transparency for how banks serve low- and moderate-income communities. While community banks are required to comply with the CRA, credit unions are completely exempt, despite only fourteen percent of credit union members qualifying as lower-income.
And now, they’re spending big on branding and marketing. Kansas-based CommunityAmerica Credit Union sponsored Patrick Mahomes and the Kansas City Chiefs in 2016 and became the team’s “exclusive banking partner” in 2019. In 2020, they ran a Super Bowl ad starring Mahomes. In August 2024, Northwest Federal Credit Union secured an eight-year naming rights deal with the Washington Commanders, exceeding $8 million. Public Service Credit Union, L&N Federal Credit Union, and Mountain America Credit Union signed pricey stadium naming rights deals as well.
The unhindered credit union expansion can be largely attributed to the National Credit Union Administration’s (NCUA) arbitrary loosening of regulations. Starting in 1998, the NCUA began rewriting rules to allow credit unions to define the communities they serve and thus offer memberships far beyond people of modest means. This gave credit unions carte blanche authority to open memberships to anyone, all while being subsidized by taxpayers.
One potential solution to stymie the NCUA’s brazen regulatory changes could be to close the agency and fold its authorities under the Treasury Department. This would give the Trump administration much more control over how credit unions are regulated. President Trump already appears to be moving forward with this plan by removing two board members from the NCUA. Without at least two members, the NCUA cannot conduct new business.
The real cost to communities is billions in lost federal revenue— money that could support schools, roads, and small businesses. Removing the credit union tax exemption would add $30 billion over ten years in additional revenue to the federal government. This presents Congress with the opportunity to address and mitigate wasteful spending in the upcoming tax bill.
In January of this year, Politico reported that Republican lawmakers are considering closing the credit union loophole to help pay for President Trump’s tax reform bill. We all witnessed the impact of the 2017 Tax Cuts and Jobs Act on our economy. Now, imagine the additional benefits that could arise from removing this unfair exemption and gaining $30 billion in extra revenue to help eliminate taxes on tips for hardworking Americans.
This isn’t about punishing credit unions—it’s about restoring fairness and accountability. Credit unions now act just like banks, so they should be taxed and regulated like banks. The bottom line is the American taxpayer shouldn’t be footing the bill for credit unions to name stadiums or shower their executives with lavish, secret compensation. If Republicans in Congress really care about saving taxpayer money, they must close this loophole, enforce oversight, and even the playing field.
Aiden Buzzetti is the President of the Bull Moose Project
Read Full Article »
