Abandoned Mission

The problem isn’t that credit unions are offering more services to more customers. Rather, the problem is that American taxpayers are the ones propping up a multi-trillion-dollar credit union industry with a tax-free ride and little accountability.

American taxpayers have once again completed their civic duty of meeting the IRS filing deadline, but for a $2.17 trillion portion of our economy – the industry comprising America’s 4,760 credit unions – April 18 was just another Tuesday.

In December 2022, over 200 credit union lobbyists descended on Charleston, South Carolina, to plot their advocacy strategy for the year ahead. Participants made clear that the credit union industry plans to continue paying lip service to serving low- and moderate-income (LMI) communities, while directing its efforts toward expanding into new affluent markets.

As the regulatory regime for credit unions becomes more relaxed, complex credit unions have become indistinguishable from community banks. Their ability to raise investor capital with 30-year horizons facilitates growth that goes well beyond credit unions’ original purpose.  

To borrow from the great line purportedly uttered by late Sen. Everett Dirksen about spending in Washington – “a billion here, a billion there, and pretty soon you’re talking about real money” – credit unions are taking huge advantage of their regulator’s relaxed position on the highly profitable not-for-profits by raising hundreds of millions of dollars a quarter from hedge funds and other for-profit investors in the form of subordinated debt.