WASHINGTON—The American Bankers Association is stepping up its campaign to push Congress back into the credit union tax fight, rolling out new survey data the group hopes will give lawmakers a reason to revisit an issue that hasn’t seen a hearing in 20 years.
Noting that 20 years have passed since Congress last held a hearing to conduct oversight of the federal tax exemption that credit unions receive, the ABA reported that a new survey conducted by Morning Consult on behalf of the ABA finds that a wide majority of U.S. consumers (67%) believe that Congress should reexamine the tax-exempt status of federal credit unions while only 14% opposed such a hearing.
In addition, according to the ABA, the survey found that:
- More than three times as many consumers believe credit unions should pay federal taxes just like banks compared to those who feel they should not (58% vs. 18%, respectively).
- Only 17% of Americans are aware that credit unions do not pay federal taxes, while 83% are unaware of credit unions’ tax-exempt status
- By a 5-to-1 margin (64% vs. 13%), consumers believe that credit unions should have the same disclosure and taxation requirements as other tax-exempt organizations
“Since Congress last held a hearing on the credit union tax exemption in 2005, many large credit unions have prioritized growth over serving people of modest means connected through a common bond,” said Rob Nichols, ABA president and CEO. “This new survey shows that consumers agree it’s time for Congress to reexamine federal credit unions in the name of greater transparency and accountability, and to ensure credit unions' activities align with their original Congressionally mandated mission.”
The ABA said the survey also reveals how consumers view the regulation of non-banks, including credit unions and fintechs:
- Eight in 10 adults (79%) care if the business that handles their finances is held to the same legal standard for consumer protection as a bank and the vast majority (90%) agree that any business providing bank-like services to consumers should be held to the same standards for consumer protection as a bank
- By a 7-to-1 margin, consumers said credit union acquisitions of banks should receive the same level of regulatory scrutiny as bank mergers (68% said they should vs 10% who said they shouldn’t)
“It is undeniable there is a growing demand – including from regulators and members of Congress – for more transparency and accountability within the credit union sector,” said Nichols. “A Congressional hearing is long overdue and would give credit unions an opportunity to demonstrate how they are meeting their mission.”
The full results for survey questions are below:
When asked “To the best of your knowledge, which of the following best describes how credit unions pay federal taxes?” consumers provided the following answers:
- Credit unions do not pay federal taxes – 17%
- Credit unions pay federal taxes – 26%
- Don’t Know/No Opinion – 57%
When asked “Knowing what you know about the similarities between credit unions and banks, which of the following comes closest to your view, even if neither is exactly right?” consumers provided the following answers:
- Credit unions should pay federal taxes just like banks – 58%
- Credit unions should not pay federal taxes just like banks– 18%
- Don’t Know/No Opinion – 25%
When asked “It has been 20 years since Congress last held a hearing to conduct oversight of the credit union tax exemption. Do you agree or disagree that Congress should reexamine the tax-exempt status of these financial institutions?” consumers provided the following answers:
- Strongly agree – 28%
- Somewhat agree – 39%
- Somewhat disagree – 9%
- Strongly disagree – 5%
- Don’t Know/No Opinion – 19%
When asked “Do you agree or disagree that federal credit unions should have the same disclosure and taxation requirements as other tax-exempt organizations?” consumers provided the following answers:
- Strongly agree – 29%
- Somewhat agree – 35%
- Somewhat disagree – 9%
- Strongly disagree – 4%
- Don't know – 24%
When asked “Do you agree or disagree with the following statement? Any business providing bank-like services (i.e. checking and savings accounts, loans, etc.) to consumers should be held to the same standards for consumer protection that banks are.” consumers provided the following answers:
- Strongly agree – 64%
- Somewhat agree – 26%
- Somewhat disagree – 2%
- Strongly disagree – 1%
- Don't know – 7%
When asked “Which of the following comes closest to your view, even if neither is exactly right?” consumers provided the following answers:
- I care if the business that handles my finances is held to the same legal standard for consumer protection as a bank – 79%
- I don’t care if the business that handles my finances is held to the same legal standard for consumer protection as a bank – 7%
- Don’t Know/No Opinion – 15%
When asked “Knowing what you know about the similarities between credit unions and banks, which of the following comes closest to your view, even if neither is exactly right?” consumers provided the following answers:
- Credit union acquisitions of banks should receive the same level of regulatory scrutiny as bank mergers. – 68%
- Credit union acquisitions of banks should not receive the same level of regulatory scrutiny as bank mergers. – 10%
- Don’t Know/No Opinion – 22%
CU Advocates Respond
Washington credit union advocate John McKechnie emphasized bankers unrelenting attacks on the movement.
"ABA clearly has an inexhaustible supply of angst about the credit union tax exemption,” McKechnie told CUToday.info. “I guess it's easier to target credit unions than it would be to give consumers a better deal."
The Defense Credit Union Council quickly addressed the study.
“It’s disappointing to see the ABA roll out a selective survey and then try to claim credit unions don’t matter — when in the real world, we’re right there with the people who serve our country,” said Defense Credit Union Council Chief Advocacy Officer Jason Stverak. “During this government-funding lapse, credit unions didn’t wait for Washington to act. As we at DCUC have documented, our member credit unions offered 0 % emergency loans, waived fees, activated skip-a-pay programs, and provided targeted relief to the men and women in uniform, veterans, federal employees and contractors facing uncertainty.
Asked, “where were the banks?”
“When military families faced delayed paychecks, whose phone rang at 3 a.m.? Whose teams showed up on base? Who had programs ready to fill the gap? Credit unions did,” he said. “The ABA’s narrative glosses over that difference. Credit unions operate on a mission-first model — we reinvest in our members rather than chasing quarterly profits. That’s why during a shutdown, credit unions stepped up. For example: “In the last four weeks, credit unions stepped up as ‘first-financial responders,’ offering 0% furlough loans, skip-a-pay options, fee waivers and other emergency relief.”
Stverak emphasized that the credit union difference isn’t a talking point — it’s action.
“It’s the difference between waiting on Congress and regulators to rescue you versus having a trusted partner ready when life happens,” he said. “So the next time the ABA surveys the marketplace and issues conclusions, I encourage media and policymakers to ask: Which institutions were in the trenches for those who serve our country? Because credit unions were there. Banks weren’t front-and-center.”
ACU Addresses Banker Attack
“Economic freedom within our country is under attack by banks," said Scott Simpson, president/CEO of America’s Credit Unions. "Their latest ‘survey’ is an egregious attempt to mislead policymakers and consumers; an effort to eliminate a threat to their profits. Credit unions, and their cooperative finance model, are essential to financial security and prosperity for millions of Americans across our country. When given the facts, consumers overwhelmingly support expanding access to credit unions and protecting their not-for-profit tax status. If banks had it their way, consumers would be forced to pay billions of dollars more to access financial services through institutions with a track record of questionable behaviors that compromise people’s livelihood. Credit unions are here to protect people against that.”