Credit Union Competition

Congress established credit unions in the 1930s to provide small-dollar loans to close-knit groups of people of modest means. To encourage credit unions in their mission, Congress exempted credit unions from federal income taxes.

However, many of today’s credit unions bear little resemblance to the industry that received this special tax exemption and today have become indistinguishable from the banking industry. Credit unions have leveraged their taxpayer subsidy to aggressively grow—becoming a $1 trillion industry. And as the credit union industry expands, it does so at the expense of all taxpayers.