Abandoned Mission

It made sense in the 1930s for the government to subsidize credit unions by letting them off the hook from paying federal income taxes. Back then, they helped at-risk communities survive hard times by expanding access to credit to those who needed it most. Large credit unions have long abandoned that mission, and today are seeking membership growth—by targeting rich people.

Abandoned mission icon

Expert Views

Erica York, Tax Foundation
“Given the change in the financial sector over the last several decades, it would be useful for lawmakers to reexamine the extent to which credit unions currently fulfill their original purpose. If they have strayed from their intended function and now resemble other taxed financial institutions, their exemption would represent a disparity across similar economic activities.” 
— Tax Foundation, 2018
Karen Shaw Petrou, Federal Financial Analytics, Inc.
“About half of all credit unions are allowed to use ‘secondary’ capital instruments generally barred for banks. Credit unions that issue this capital fail at a rate that is 362 percent greater than conservative institutions. Proposals to expand the use of these instruments thus may increase overall solvency risk in the credit-union sector, exposing members and the broader economy to risk.” 
— Federal Financial Analytics, 2019
Aaron Klein, The Brookings Institute
“But if your word is your bond, does everyone who speaks share a common bond? In that case, the concept of a common bond is meaningless. That is the direction that the nation’s credit union movement, including its federal regulator, appears to be moving — and that’s something the public and policymakers need to stop and think about.” 
— The Brookings Institution, 2017

Large Credit Unions Have Abandoned Their Mission

Recent News and Insights


Wings Financial Credit Union – with nearly $7 billion in assets – planned to buy Neighborhood National Bank of Mora, Minn. The deal was announced in March 2020 for the credit union giant to buy the $200 million bank. But in early 2021 the deal fell apart, much to the surprise of Neighborhood National CEO Doyle Jelsing.


A move by the NCUA to allow large credit unions to issue subordinated debt for regulatory capital purposes from outside for-profit investors—such as corporate debt markets—while retaining their tax exemption, undermines the statutory principle that credit unions should serve consumers of small means, ABA President and CEO Rob Nichols wrote in an American Banker op-ed yesterday.

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