By Jason Stverak
When the federal government shutdown hit, credit unions across the country sprang into action. They offered furloughed government employees and military families emergency no-interest loans, skip-a-payment options, and fee waivers to help make ends meet.
For example, one California credit union provided 0% APR relief loans up to $10,000 and allowed affected members to withdraw savings early without penalties. In Washington State, a credit union eliminated fees on cash advances and let members defer loan payments, creating an “Emergency Paycheck Advance Loan” program to bridge the gap until federal back pay arrived. These swift, solution-oriented responses weren’t one-offs – they typified how credit unions nationwide put their members first during the crisis.
This proactive approach stood in stark contrast to the banking industry’s response. When the shutdown began on October 1, a local bank in Washington, D.C., sent its customers nothing – no message of support or acknowledgment that thousands of families might be struggling. Meanwhile, a nearby credit union immediately reached out with concrete relief options and removed barriers to emergency funds. This stark example illustrates “the credit union difference” in action. While many big banks offered only generic statements or advised customers to call if they needed help, credit unions were already doing help – publicly and decisively. In short, credit unions acted like the financial first responders of their communities, while much of the banking sector remained comparatively quiet.
A People-First Structure Enables Swift Action
What gives credit unions the agility and willingness to assist so aggressively? It comes down to structure and mission. Credit unions are not-for-profit, member-owned cooperatives – they don’t answer to stockholders or chase quarterly profits. Their sole purpose is to serve their members’ financial well-being. As one industry observer noted, unlike profit-driven banks, credit unions “exist to serve working families” with a “people-first mission” that truly sets them apart from for-profit banks. This member-centric model empowers credit unions to put community needs above the bottom line. Decisions aren’t filtered through distant shareholders; they’re made by members and local boards who live in the same communities and feel the same pain when neighbors miss paychecks.
This cooperative DNA is precisely why credit unions could waive fees, pause loan payments, and front emergency funds without hesitation. Every dollar not paid in shareholder dividends is a dollar that can be used to support a member in need. The recent shutdown made it clear: credit unions’ tax-exempt, not-for-profit status isn’t a perk – it’s the engine that enables them to act quickly and compassionately when their communities face hardship. It’s a feature of our financial system that benefits not just credit union members, but whole communities, especially when crisis strikes.
Bank Lobby’s Retaliatory Push For IRS Form 990
Rather than applaud these community-focused efforts, the banking lobby has answered with a cynical counterattack. In the wake of credit unions’ high-profile support for furloughed workers, bank trade associations are renewing their push to force federal credit unions to file IRS Form 990 – a detailed annual disclosure meant for non-profits. This attempt to add another regulatory burden is nothing less than a retaliatory, anti-competitive tactic by the banking industry. Big banks have long resented credit unions’ tax status and community loyalty, and now their lobbyists see an opening to saddle credit unions with new regulatory burdens under the guise of “transparency.” The timing is hard to ignore: credit unions upstaged banks during the shutdown, and almost immediately the bank lobby began clamoring for more paperwork requirements on their cooperative competitors.
Let’s call this push what it is – a ploy to hamstring credit unions. The claim from banking lobbyists is that requiring Form 990 filings would improve transparency. In reality, it’s a solution in search of a problem, aimed at slowing down credit unions’ growth and redirecting their resources. Transparency is not the true goal; if it were, bankers would be equally vocal about the opaque practices in their own industry. Instead, this is about retaliation and competitive frustration. A national bankers’ survey last year openly admitted the agenda: five times as many respondents wanted credit unions to face the same disclosure and tax requirements as other non-profits. Unable to match credit unions’ community goodwill, the banks hope to bog credit unions down with regulatory red tape.
Credit Unions Already Provide Full Transparency
The transparency argument doesn’t hold water under even mild scrutiny. Federal credit unions are already subject to extensive financial reporting and oversight – far more granular than what an IRS Form 990 would add. Every quarter, each credit union files a detailed Call Report with the National Credit Union Administration, containing roughly 3,400 data fields covering virtually every aspect of operations: loans, investments, deposits, income, expenses, and more. In addition, credit unions submit an NCUA Form 4501A profile with about 400 fields of information on products and services offered, branch locations, key officials and directors, and other operational details. These reports are not stashed away in some vault – they are reviewed by federal regulators and much of the data (like financial statements and aggregate expenses) is publicly available on the NCUA’s website. Any interested party can readily see a credit union’s financial condition, lending activity, and even total compensation expenses in these quarterly filings.
By comparison, the IRS Form 990 is a blunt instrument. It contains around 250 fields, many of which duplicate information already reported to NCUA or otherwise required by law. In fact, federal credit unions were explicitly exempted by the IRS from filing Form 990 back in 1988 because their regulator (NCUA) was already collecting the necessary information. For decades since, that exemption has stood as recognition that piling an IRS form on top of NCUA oversight is redundant and legally unnecessary. There is no transparency gap here. Federal credit unions operate under the close supervision of a dedicated federal agency, with stringent reporting, regular examinations, and public disclosure of their financials. Adding a Form 990 requirement would yield little beyond bureaucratic duplication.
The Bankers’ Double Standard On Disclosure
If “transparency” were truly the concern, the banking industry would be looking in the mirror. Banks themselves are not held to the same public disclosure standards that they incessantly demand of credit unions. A glaring example is the prevalence of Subchapter S banks – roughly one-third of all U.S. banks have elected Subchapter S tax status. These banks pay no federal corporate income tax at the entity level, just like credit unions. Yet not a single one of these tax-advantaged banks files a Form 990 or discloses its executive compensation to the public. In other words, the banking lobby is pushing for a “transparency” rule that no private bank is subject to itself. This is a textbook double standard.
The hypocrisy runs even deeper. Studies over the past decade show that while tax-exempt credit unions use their tax savings to offer consumers better rates and lower fees, Subchapter S banks largely use their tax status to pad shareholder returns. In fact, banks benefiting from this tax setup funnel the savings straight to Wall Street investors – there’s no requirement to reinvest in communities or report how those benefits are used. Banks also aren’t required to publicly divulge what they pay their CEOs or executives, unless they are large publicly traded firms. A small community bank can be quietly paying its executives seven-figure salaries with no public oversight, even as it pays zero corporate taxes under an S-corp election. Yet that same bank lobby has the audacity to demand that every credit union – even the smallest volunteer-run cooperative – publish its chief executive’s salary for all to see. It’s a glaring inconsistency that reveals the true motive: it’s not about fairness or transparency, but about undermining the credit union movement.
Redundant Mandates Hurt Main Street, Not Help It
Requiring federal credit unions to file Form 990 would be redundant, burdensome, and counterproductive. Credit unions – especially small and mid-sized ones – operate with lean staffs and tight budgets. The median credit union in America has only a few dozen employees, many of whom wear multiple hats to serve their community. Imposing an additional complex IRS filing (with hundreds of data fields that overlap existing reports) means siphoning time and money away from member services to accountants and attorneys. Unlike mega-banks, a neighborhood credit union doesn’t have an army of compliance officers on standby. For them, a new mandate like this isn’t a trivial paperwork update – it’s a significant expense of scarce resources that could otherwise be spent issuing small-business loans, opening new branches in underserved areas, or improving digital banking for members.
Critically, this mandate is unnecessary from a legal and oversight standpoint. Federal credit unions’ safety, soundness, and accountability are already ensured by the NCUA’s robust supervisory framework. Forcing them to also file Form 990 would not make credit union operations any safer or more transparent – it would simply duplicate what is already known, and publicly available, in a different format. Even the informational content of Form 990 adds little beyond listing top executive salaries and board member names – facts that have not been shown to be a problem area in need of federal intervention. In short, this proposed requirement would create paperwork for paperwork’s sake. It would burden hundreds of community-based institutions with an extraneous compliance cost, ultimately paid for by their member-owners, with no tangible benefit to the public.
Protecting The Cooperative Mission
At a time when credit unions have proven once again why they are so essential – by stepping up for Americans during a government shutdown – policymakers should be celebrating and reinforcing their role, not saddling them with pointless new filings. The banking lobby’s push to mandate IRS Form 990 for credit unions is a transparent attempt to punish cooperatives for their successes and to slow down a formidable competitor in consumer finance. Lawmakers and regulators must see this maneuver for what it is and firmly reject it. Creating redundant requirements will not enhance transparency or fairness; it will only undermine the not-for-profit financial institutions that consistently go above and beyond for their communities.
Credit unions have earned their tax-exempt, cooperative status many times over by fulfilling a public purpose – serving “people of small means” and those overlooked by profit-driven banks. They demonstrated that mission yet again during the recent shutdown, helping families stay afloat when it mattered most. Now, the focus should be on empowering these member-owned institutions to continue their good work, not drowning them in duplicative paperwork. The cooperative model is a cornerstone of financial inclusion and community resilience in our country. Policymakers should protect it by rejecting the banking lobby’s retaliatory Form 990 mandate, and instead ensure that credit unions can remain focused on what they do best: serving their members and building financial health on Main Street.
In sum, credit unions have shown they will show up for America’s workers and communities in times of need. It’s imperative that our leaders show up for credit unions now – by standing against anti-competitive lobbying tactics and standing up for the cooperative, community-focused mission that credit unions embody every day.
Jason Stverak is Chief Advocacy Officer at the Defense Credit Union Council.