Modern credit unions have outgrown their preferential tax and regulatory treatment. Instead, they are focused on prioritizing affluent markets and commercial lending over their original mission of providing consumer-focused financial services to people of modest means. As these supposed nonprofits leverage their tax status to purchase banks and other credit unions, more than 400 credit unions now boast more than $1 billion in assets.
According to the Tax Foundation, one of the nation’s leading independent voices on tax policy, the federal income tax exemption for credit unions is inefficient, narrowly beneficial to one subset of the financial services industry, and an unfair competitive advantage that “…could be reformed, and the resulting revenue used to further improve the corporate tax base or pay for new spending.”
There are moments when it’s easy to explain how large credit unions are abusing their federal tax exemption, which was created by Congress years ago to subsidize the provision of financial services to people of modest means.
Large credit unions remind one of the classic video game Pac-Man, moving quickly and eating up as many banks as possible as their regulator remains as ethereal as the bad ghosts chasing dear old Pac. Unfortunately, the only people with a stack of quarters to keep the game going are American taxpayers as more and more banks leave the federal tax roll when they are subsumed by large, tax-exempt credit unions.
In voting for the sale, SAFCU members got $350 each. But the CEO got an agreement for five years of salary plus a three-year buyout. – CU Today, October 2020
The University of Kentucky Federal Credit Union (UKFCU) and JMI Sports, UK’s multimedia rights partner, have announced a naming rights partnership with the university for the esports complex in The Cornerstone, a new multiuse facility now under construction at the corner of South Limestone and Winslow Street on campus.
Alaska USA Federal Credit Union (Anchorage, AK) and TCF National Bank, a subsidiary of TCF Financial Corporation (Wayzata, MN), announced on January 8 that Alaska USA has signed a definitive agreement to acquire TCF Bank’s seven branches located in the greater Phoenix, Arizona market, along with deposits and certain related assets.
Idaho Central Credit Union (Chubbuck, ID) has bought the naming rights to a plaza at ski resort.
A credit union that enjoys an exemption from federal taxes has bought the naming rights to a 5,000-seat theater in downtown Phoenix, continuing a trend among large credit unions to stray far away from the modest mission established for the industry by Congress years ago, in favor of aggressive market expansion.
Back in grandpa’s day, credit unions required a “common bond” for membership. That is, members who pooled their money to help those of “small means” needed to share a common employer, hometown, or go to the same church to enjoy special treatment from the government.
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