By Ray Birch
WASHINGTON—Credit union leaders across the movement—from the Defense Credit Union Council and America’s Credit Unions to veteran Washington advocates—are sharply rejecting a renewed banker effort to force federal credit unions to file IRS Form 990, calling the push misguided, redundant, and rooted in long-standing industry rivalry rather than genuine transparency concerns.
As CUToday.info reported, bankers have reportedly intensified their campaign to weaken credit unions’ standing on Capitol Hill, circulating a draft letter that urges Treasury Secretary Scott Bessent to roll back a 54-year-old exemption that allows federal credit unions to forgo filing Form 990—an annual disclosure required of nearly all other tax-exempt organizations.
Jason Stverak
Although the draft letter remains unsigned—and no banking trade group has taken ownership—the Defense Credit Union Council, which is preparing for a fight, says the effort marks the latest escalation in a long-running campaign to saddle credit unions with new regulatory burdens.
“Credit unions will not sit quietly while the banking industry pushes yet another misleading attack disguised as a call for ‘transparency.’… Requiring federal credit unions to file IRS Form 990 is unnecessary, duplicative, and purely a bank-lobby power play—not a public-interest reform,” said Jason Stverak, DCUC chief advocacy officer.
Stverak explained that for more than 50 years, Congress and the IRS have intentionally exempted federal credit unions from Form 990 because these institutions pay no federal income tax, are already heavily regulated, and provide full quarterly disclosure through thousands of data fields reported to NCUA.
“A Form 990 mandate would add no new transparency whatsoever. It would simply force credit unions to spend more resources on redundant paperwork instead of serving their members,” he said.
Stverak stressed that this push did not come from regulators or consumers.
“It came solely from bank trade associations—the same groups whose members enjoy tax loopholes like Subchapter S status, zero public disclosure of owner tax benefits, and hundreds of billions in tax windfalls from recent federal tax changes. If banks truly cared about transparency, they would start with themselves,” he said. “DCUC strongly urges Congress to reject this bank-driven misinformation campaign. There is no transparency problem to solve—only a bank lobby attempting to handicap its nonprofit competitors.”
Dollar: ‘Sad’ Pattern Of Bank Attacks—And A Nonstarter Legally
Dennis Dollar
Former NCUA Chairman Dennis Dollar, long familiar with repeated banker attempts to impose Form 990 rules on federal credit unions, said the effort is unlikely to gain traction—even if banks are shopping the talking points more aggressively this year.
“The banker lobby has pushed for bringing federal credit unions under the 990 IRS reporting mechanism for years and have had no more success than they have had in Congress on taxation or bringing credit unions under CRA,” stated Dollar, principal at Dollar Associates in Birmingham, Ala. “They are trying anything they can try in hopes of getting policymaker traction and they just end up unsuccessfully slip sliding from one issue to their next issue they throw out there with little basis other than competitive disdain.”
Dollar said he does not believe the newest 990 campaign will get traction this time any more than in the past because it would effectively remove the federal preemption that has been in place since the Federal Credit Union was passed in 1934.
“Removing the federal preemption in one area would essentially break the wall between federal law and regulation with state law and regulation in countless others,” he explained. “The system of federalism that is such a delicate balance would be stood on its head with state-by-state laws, rules and enforcement on federally chartered and regulated entities in every field from energy to commerce to the environment. Throwing out the federal preemption precedent would have far reaching implications in many more areas than just IRS 990 forms. Congress or any administration is very, very unlikely to go down that road.”
Dollar called it “almost sad” that community banks—which he said are the ones that primarily drive “anti-credit union vitriol” in their industry—bounce from one issue to another “to try to get someone in Washington to believe credit unions have an unfair advantage over them when it is their large bank brethren who are eating their lunch in the marketplace.”
Dollar pointed out that over the past thirty years community banks have fallen from over 50% of financial industry assets to below 17% while the largest banks have grown to over 75% of the industry assets.
“Credit unions are still below 10% as they were thirty years ago,” he said. “I ask you. Who’s eating who’s lunch? And who obviously has the marketplace advantage? It’s not answered by who files IRS 990 forms.”
ACU: Bank Letter Found On Veterans Day
Scott Simpson
America's Credit Unions President/CEO Scott Simpson said he learned of the letter being pushed by bankers on Veterans Day when taking a walk with a member of Congress, whose office had received the letter, and then it was further confirmed the next day by a league president after hearing from another House office.
“America's Credit Unions and leagues began coordinated outreach to representatives, urging them to not sign the letter as it is nothing more than a ploy by bankers to add compliance burdens to credit unions,” Simpson said. “As a result of those efforts, the bankers' letter has received little to no traction or support.”
Simpson, too, pointed out credit unions are already required to make quarterly filings with the NCUA that go well beyond the requirements of Form 990.
“In addition, many of the fields in Form 990 overlap with fields currently required in federal credit union supervisory reporting requirements,” he explained. “Imposing a new regulatory burden on credit unions will take resources away from the 144 million Americans who rely on credit unions for financial services.
‘A Tired Issue’ That Keeps Getting Recycled
John McKechnie
Veteran Washington credit-union advocate John McKechnie said the latest push is familiar.
“The 990 issue is a little bit tired—I think it’s the third or fourth time in my credit union career that the bank lobby has tried to go after federals on this,” McKechnie said. “I don’t believe a deregulation-inclined Congress is going to listen to their complaints, but I’m pleased to see credit union advocates taking this seriously and pushing back.”
No Ownership Of Letter—But Clues?
CUToday.info reached out to the American Bankers Association and the Independent Community Bankers of America last week to ask whether either group authored or distributed the letter. Neither responded. Of note, the ABA’s new survey release highlights Form 990 and “transparency.” And the draft 990 letter proposes exempting credit unions under $1 billion—a threshold identical to the ICBA’s earlier proposal that all CUs above $1 billion be taxed.