One More Way Large Credit Unions Abuse their ‘Not-for-Profit’ Status

Large credit unions continue to unabashedly flout the rules for their “not-for-profit” industry, and they’re only getting more brazen by the day.

A few recent “highlights”:

  • Ever-expanding so-called “field of membership” requirements to join. Has anyone been able to get $25 billion PenFed’s ubiquitous advertising ditty out of their heads, “Great rates for everyone”? (If that’s not enough, enjoy this (long) list of credit unions with open membership.)
  • Over $1.2 billion in profits for Navy Federal in just the first three months of 2019 – not bad for a credit union with over $103 billion in assets that pays zero in federal taxes!
  • How about the 20-year, $120 million deal for basketball stadium naming rights paid by Golden 1 in Sacramento? Maybe not that expensive for a $13 billion “not-for-profit” credit union.

The list goes on, and on, and on. In case you thought the large credit union cash-grab had come to an end, fret not … there’s more.

In one of the most brazen examples yet, credit unions are pushing regulators to make it even easier to accept deposits from people and organizations with absolutely no connection to the credit union.


Since the 1980s the NCUA – the primary credit union regulator – has allowed limited non-member deposits. These funds have been used to provide fuel to expand and, unfortunately, in many cases have caused some of the largest cases of fraud in credit union history. (The $2 million Nebraska credit union whose epic, fraud-driven meltdown cost taxpayers $40 million comes to mind.)

Now, credit unions want even more access to non-member deposits, and it appears the NCUA – a regulator that at times behaves more like an industry advocate – is leaning toward allowing this further shift away from the central mission of credit unions: to serve their members.

So what is this all about? It’s simple: growth, growth, growth. Deposits help drive growth, but when deposit gathering is abused it can create opportunities for serious and potentially systemic trouble if not well-managed and well-regulated. The current NCUA proposal falls far short on both fronts. In fact, by opening the spigot for non-member deposits to flow into credit unions, NCUA creates new risks for the entire industry. What’s worse, since the NCUA has made clear they want to lift limits on public deposits, funds going to credit unions may be taxpayer dollars, leaving us all more exposed.

Large credit unions lean hard on the industry’s time-honored mantra of “for people, not profit” as subterfuge for their relentless growth agendas. But as we’ve chronicled here again and again, the largest credit unions have graduated.  By any rational definition, they are, quite simply, banks that don’t pay taxes.

Regulators and lawmakers must hold these large and growing financial institutions to task and stop letting them hide behind the small credit unions that abide by their missions and actually serve the communities they were intended to serve.

See the impact on taxes in your state.

Tell Congress: It’s time to reform credit unions.