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Last week, 52 state banking associations sent a letter to the U.S. Treasury Department requesting a formal study of the credit union tax exemption. The letter calls on the Treasury to examine whether credit unions should continue to receive this exemption and whether legislative or regulatory changes should be made.
In response, America’s Credit Unions, the American Association of Credit Union Leagues (AACUL), and every League nationwide—including ours—delivered a unified rebuttal. In a letter addressed to Assistant Secretary for Financial Institutions Ken Kies, the message from our industry was unmistakable: credit unions are steadfast in fulfilling the purpose for which they were founded, and the federal tax exemption remains an essential instrument for enabling that mission.
The credit union tax exemption is rooted in our cooperative, not-for-profit structure and our unwavering commitment to the philosophy of People Helping People. While credit unions have evolved to meet the changing needs of their members and communities, their core mission remains unchanged. Our League proudly stands alongside our national partners to defend the credit union difference. We will remain vigilant, monitoring developments closely, and continuing to advocate in Washington on behalf of credit unions and the members they serve.
In other news coming out of our nation’s capital, President Trump signed an Executive Order to address “debanking.” The order will direct banking regulators, including the NCUA, to address any politically-motivated account closures. In an interview with CNBC, President Trump claimed that “JPMorgan Chase, Bank of America, and others refused to accept his more than $1 billion worth of deposits.” He also stated that he had to “spread his cash across small banks all over the place.”
America’s Credit Unions (ACU) informed leagues that they are not aware of any instances of politicized debanking within the credit union industry. They affirmed their support for credit unions’ ability to independently assess and manage risk when determining the members they serve. ACU has reached out to both the White House and the NCUA on this issue and released the following statement from President/CEO Jim Nussle:
“The not-for-profit credit union system thrives by serving the diverse financial needs of all Americans. Industry bylaws have long reflected a mantra of ‘once a member, always a member,’ and despite regulatory pressures, it would be counterintuitive for a credit union to limit its membership beyond what the law requires. Some credit unions have also endured costly litigation in order to serve higher risk members. Guided by the industry’s cooperative principles, credit unions continue to welcome Americans of all backgrounds, including those in unique economic sectors or with complex financial profiles, but we strongly support credit unions’ ability to lawfully manage risk. We look forward to working with the NCUA to protect credit union interests in implementing the executive order, and with the Administration and Congress to limit regulatory overreach to protect consumers’ access to credit unions.”
Our League will keep credit unions apprised as we learn more.