By Scott Simpson
It takes some nerve to call member-owned credit unions an “illusion,” but that’s exactly what the Independent Community Bankers Association (ICBA) is doing in its latest advocacy campaign.
What’s really illusory is the narrative the ICBA is pushing, one built on selective data and misleading claims, all in service of pushing aside a competitor that has helped strengthen the financial resilience of millions of Americans.
Credit unions didn’t appear out of thin air.
More than a century ago, they were created by people who wanted a fair shot at financial opportunity when banks wouldn’t provide one. They were built on cooperative principles and a simple idea: people pooling resources to help one another succeed.
That mission hasn’t changed since the first U.S. credit union opened its doors in 1909. What has changed, however, is everything around them.
That’s why strong majorities of Americans support credit union growth: 94% support allowing credit unions to expand into more communities and provide more loans to small businesses; 80% agree Americans would be better off financially if more were to use credit unions rather than banks.
Cooperative finance in the U.S. has now grown to serve more than 145 million people. They serve teachers, farmers, small business owners, police and first responders. More than half of the largest credit unions’ memberships are military members, veterans, and their families.
Strong Track Record
How have credit unions maintained their longevity? Because they are trusted financial partners. Their track record proves they can be relied on. During the Great Depression, the Federal Credit Union Act granted credit unions’ not-for-profit tax because they were there when people needed them most.
As not-for-profits, credit unions give back to their members in significant ways. Earlier this year, Michigan’s DFCU Financial deposited $18.7 million in cash back into member accounts, the 20th anniversary of DFCU Financial's Cash Back program, returning more than $510 million to members since launching in 2006. In Kansas City, small credit union Holy Rosary Credit Union is giving people second chances and hope through mortgage lending and small business programs.
Following the 2008 financial crisis, credit union lending was 15% higher than banks’. And amid last year’s historic government shutdown, credit unions provided hundreds of millions of dollars in relief to impacted members. They’re constantly assessing and reassessing what they can do to make life more affordable for families and small business owners.
I'd argue the long history of bank failures, massive fines, and widespread consumer harm makes one thing clear: credit unions are not the bad actors. They are safe, secure, and future‑focused institutions that people can trust and rely on.
The credit union tax status enables lower rates on loans, higher rates on savings, better customer service, and prioritization of member financial well-being. Banks have plenty of tax breaks and subsidies that enable them to reach higher profits year after year. But those profits aren’t returned to bank customers; they’re paid to their shareholders.
Even banks’ “competitive” rates can be attributed to credit unions’ presence in the market. A study from American University shows that credit unions drive lower costs and improve products for consumers, regardless of where they bank. That leads to roughly $23 billion in consumer benefits each year. Not to mention the credit union tax status delivers a 1,200% return on investment to the U.S. government.
Bankers point to increased bank-to-credit union sales as a reason to rescind the tax status, but they leave out that bank-to-bank sales account for 96% of bank sales since 2012. Banks selling to credit unions are voluntary, and approved by banks’ boards of directors to maintain local ownership, service, and a mission-driven approach that benefits the community. Without them, communities would see closed branches, banking deserts, and reduced investment.
A 'Convenient' Reading
And the banking lobby’s claim that credit unions somehow reduce lending to small businesses depends on a convenient reading of Small Business Administration data. Look at the numbers honestly and a different story emerges: many of those banks had minimal SBA activity before the sale. After the branches became part of a credit union, small business lending at those same locations actually increased.
It’s also worth remembering who credit unions exist to serve. The idea that people of modest means shouldn’t have the same opportunity to build a business or improve their financial future runs counter to the basic promise of this country. Economic freedom, the chance to work, save, borrow and grow, is central to the American pursuit of happiness. Credit unions thrive when their members thrive, and that alignment matters.
Credit unions are not the illusion in this debate. The real illusion is the banking industry’s insistence that cooperative finance is somehow harmful. The history of credit unions, and the data in front of us today, tell a different story, no matter how many slick videos or shady websites the banking lobby produces to argue otherwise.
Scott Simpson is America’s Credit Unions President/CEO.