Issue of Interest: Credit Unions

ABA Media Contact: Jeff Sigmund
Phone: (202) 663-5439
Email: jsigmund@aba.com
Last updated: March 20, 2017

The 1934 law establishing the federal credit union charter stated its purpose was "to make more available to people of small means credit for provident purposes through a national system of cooperative credit."

Once, members of a credit union knew each other and pooled their resources to provide credit for their co-workers and/or neighbors. This common bond, the hallmark of the credit union industry, has been stretched beyond recognition.

Today, many credit unions have grown into highly profitable, billion-dollar institutions offering a full range of financial services- including insurance and securities brokerage- to just about anyone. Though these institutions look and act like banks, they do not pay taxes or abide by the same rules as banks.

The NCUA has steadily adopted policies that have expanded credit union membership beyond the limits prescribed by Congress. As credit union membership expands, so does the cost to American taxpayers, who underwrite the credit union industry's tax subsidy to the tune of more than $1 billion a year.

ABA has challenged NCUA's policies through comment letters and in court and will continue to make the case that similar institutions ought to be treated similarly.

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