National Survey: Majority of U.S. Consumers Think Congress Should Hold Credit Unions Accountable

With 20 years having passed since Congress last held a hearing to conduct oversight of the federal tax exemption that credit unions receive, a new survey conducted by Morning Consult on behalf of the American Bankers Association finds that a wide majority of U.S. consumers (67%) believe that Congress should reexamine the tax-exempt status of federal credit unions while only 14% opposed such a hearing. In addition, the survey found that:

• More than three times as many consumers believe credit unions should pay federal taxes just like banks compared to those who feel they should not (58% vs. 18%, respectively). 
• Only 17% of Americans are aware that credit unions do not pay federal taxes, while 83% are unaware of credit unions’ tax-exempt status.
• By a 5-to-1 margin (64% vs. 13%), consumers believe that credit unions should have the same disclosure and taxation requirements as other tax-exempt organizations.
  • Background: Most tax-exempt organizations must file a special IRS form called Form 990 to ensure basic transparency and compliance with U.S. laws for non-profits. Most tax-exempt organizations also pay taxes on business income unrelated to their tax-exempt mission. Not only do federal credit unions enjoy a federal tax exemption, but they are also exempt from filing Form 990 and from paying unrelated business income tax.

• Eight in 10 adults (79%) care if the business that handles their finances is held to the same legal standard for consumer protection as a bank and the vast majority (90%) agree that any business providing bank-like services to consumers should be held to the same standards for consumer protection as a bank. 
• By a decisive 7-to-1 margin, consumers said credit union acquisitions of banks should receive the same level of regulatory scrutiny as bank mergers (68% said they should vs 10% who said they shouldn’t). 

• Credit unions do not pay federal taxes – 17% 
• Credit unions pay federal taxes – 26% 
• Don’t Know/No Opinion – 57%  

• Credit unions should pay federal taxes just like banks – 58% 
• Credit unions should not pay federal taxes just like banks– 18% 
• Don’t Know/No Opinion – 25%  

When asked “It has been 20 years since Congress last held a hearing to conduct oversight of the credit union tax exemption. Do you agree or disagree that Congress should reexamine the tax-exempt status of these financial institutions?” consumers provided the following answers:

• Strongly agree – 28%
• Somewhat agree – 39%
• Somewhat disagree – 9%
• Strongly disagree – 5%
• Don’t Know/No Opinion – 19%

When asked “Do you agree or disagree that federal credit unions should have the same disclosure and taxation requirements as other tax-exempt organizations?” consumers provided the following answers:

• Strongly agree – 29%
• Somewhat agree – 35%
• Somewhat disagree – 9%
• Strongly disagree – 4%
• Don't know – 24%

When asked “Do you agree or disagree with the following statement? Any business providing bank-like services (i.e. checking and savings accounts, loans, etc.) to consumers should be held to the same standards for consumer protection that banks are.” consumers provided the following answers:

• Strongly agree – 64%
• Somewhat agree – 26%
• Somewhat disagree – 2%
• Strongly disagree – 1%
• Don't know – 7%

When asked “Which of the following comes closest to your view, even if neither is exactly right?” consumers provided the following answers:

• I care if the business that handles my finances is held to the same legal standard for consumer protection as a bank – 79% 
• I don’t care if the business that handles my finances is held to the same legal standard for consumer protection as a bank – 7% 
• Don’t Know/No Opinion – 15%

When asked “Knowing what you know about the similarities between credit unions and banks, which of the following comes closest to your view, even if neither is exactly right?” consumers provided the following answers:

• Credit union acquisitions of banks should receive the same level of regulatory scrutiny as bank mergers. – 68% 
• Credit union acquisitions of banks should not receive the same level of regulatory scrutiny as bank mergers. – 10% 
• Don’t Know/No Opinion – 22%