Executive Letter: WBA Joins National Call for Treasury Review of Credit Unions
By Rose Oswald Poels
WBA joined with 52 other state bankers associations this summer in signing a joint letter to the U.S. Treasury Department. The letter urges the Treasury to conduct a study of the $2.37 trillion credit union industry and assess whether its current activities align with the tax-exempt status originally granted by Congress in 1934.
Congress created the Federal Credit Union Act over 90 years ago with the intent to expand access to affordable credit for people of modest means. Credit unions have since grown far beyond that mission, with more than 450 credit unions holding assets of at least $1 billion. Many operate nationally, acquire banks, sponsor professional sports teams, or generate tax-exempt income from affiliated businesses. In 2024 alone, credit unions acquired 22 banks with nearly $12 billion in assets.
The joint letter brings these trends into the spotlight as evidence that credit unions increasingly function like tax-paying banks while avoiding the same obligations of transparency and accountability. For example, federal credit unions are exempt from filing the IRS Form 990 that other nonprofits must submit, which leaves executive compensation and other data concealed from the public.
We are asking the Treasury to examine whether tax exemption is still justified, and to provide recommendations for legislative or regulatory changes. Among these could be requiring all credit unions to pay federal income tax and requiring federal credit unions to pay unrelated business income tax (UBIT) like other nonprofits.
The Treasury estimates that the credit union tax exemption will cost the government $32.2 billion by 2034, so this review is urgent and necessary. I believe this study will bring greater accountability and ensure that taxpayer dollars are not subsidizing institutions that have strayed far from their founding objective.
With 14 credit unions in Wisconsin now exceeding $1 billion in assets, WBA remains at the forefront of these discussions in Washington, D.C. We will continue to update our members as the Treasury considers next steps on this issue.
