Three hundred four billion dollar credit unions, 5% of the industry, comprises 75% of the credit union industry’s total profits. They make so much money because they have completely evolved beyond their original purpose of supporting close-knit groups of modest individuals. The largest credit unions are effectively banks that do not pay federal income taxes.

It’s important to make a distinction between these credit unions and the other 95%, some 5,600 small credit unions. Most of these smaller institutions have tried to remain true to their original mission. Because large credit unions have abused the credit union charter and have expanded well-beyond the credit union mission, they should be required to pay their fair share in federal income taxes, the same as every American citizen and business does today, and are also deserving of appropriate regulation to ensure consumers are protected from harm.

So how did the disparity in resources between the two types of credit unions arise? Let’s explore the history of credit unions to find out.

Congress passed the Federal Credit Union Act in 1934 during the Great Depression. To promote economic recovery, Congress wanted to encourage service to lower-income people united by a common bond. Congress restricted the customer base credit unions could serve – they weren’t designed to serve everyone. Congress limited the type of products credit unions could provide, to encourage small-dollar loans to working people of modest means. And in return for these limits, Congress exempted credit unions from paying federal income taxes.

While smaller community-centric credit unions hold true to the original credit union mission, large credit unions have looked the other way, abandoning their charter in the interest of becoming even larger financial institutions. Yet, the U.S. tax system continues to reward big credit unions for this form of cheating. Explore Credit Unions is here to challenge that.

Large Credit Unions: By The Numbers

  • Nearly 75% of the credit union industry’s tax benefit goes to the 304 large credit unions with over $1 billion in assets, or less than 5% of the entire industry.

  • Barely 25% of the tax benefit goes to the remaining 95% of the industry, approximately 5,600 credit unions with assets of less than $1 billion.

  • Today there are 304 large credit unions with over $1 billion in assets. This is more than double how many existed only ten years ago.