WASHINGTON–Saying the nation’s banks have demonstrated the “highest form of hypocrisy,” America’s Credit Unions and all state and regional CU associations have sent a joint letter to Treasury that seeks to refute points made in a letter by state banking associations that calls for a study on whether credit unions continue to deserve their tax exemption.

“…Credit unions have become increasingly complex, and their recent activities call into question whether they should still qualify for their tax exemption,” more than 50 state banking groups said in their letter.

The Defense Credit Union Council earlier sent a response of its own to Treasury, as the CU Daily reported here.

‘Nothing to Hide’

“Credit unions have nothing to hide when it comes to our service to Main Street America,” the ACU/leagues letter states. “We are proud of the service we provide to Americans of all economic stripes from rural and urban communities and from coast to coast. You may already be aware of the data, but before we respond to specific inaccuracies and misperceptions in the state bankers’ letter, let us clarify for the record the basic facts about the role of nearly 4,500 credit unions in our economy, and our service to American consumers.”

Data Cited

The letter includes a chart citing Federal Reserve data that America’s Credit Unions/state associations said shows the average credit union member earns less than half the average bank customer and has a net worth that is a “fraction of the average bank customer.”
“Unlike banks, which are driven by profits and often prioritize serving businesses to maximize those profits, credit unions are deeply rooted in supporting households, as depicted below,” the letter states. “They exist to serve working families—helping them grow, achieve financial stability, and build a better future. This people-first mission is what truly sets credit unions apart from for-profit banks.”

The letter further notes that credit unions continue to “occupy a sliver of the total market. Because credit unions serve those of modest means and focus on Main Street rather than Wall Street, their share of the market has remained below 10 percent of total industry assets—just as it has since the Federal Credit Union Act was signed into law more than 90 years ago.”

‘Substantial Benefit Delivered’

In its letter America’s Credit Unions/state associations said credit unions, despite their limited market share, continue to deliver a “substantial benefit to the U.S. economy that far outweighs their size. The credit union tax exemption reduces government revenue by approximately $3 billion per year but delivers a benefit to consumers of over $37 billion. This is driven by lower loan rates, higher savings yields, and even indirect benefits for non-credit union customers as competition forces banks to improve their rates. A 2025 study by Dr. Robert Feinberg and Dr. Douglas Meade1 found this impact delivers a 1,200 percent return on investment—one of the best values for American consumers in the U.S. tax code.”

ACU/state associations told Treasury that over the past 13 years, banks have closed more than 20,000 branches while credit unions have added hundreds of branches during that time.

Inaccuracies Cited

The coalition of CU groups told Treasury there are numerous errors in the bankers’ letter, and while it would not debate each allegation made, it said some are “so inaccurate and misleading that they must be addressed.”

‘Only Bankers Could Think That Way’

Among those points, according to America’s Credit Unions/state associations:

• First, the bankers highlight that “’credit unions with assets of at least $1 billion reported the strongest growth in loans and membership over the year ending in the first quarter of 2025’….This implies that somehow a credit union with more than $1 billion in assets providing more Americans with affordable loans and higher savings rate is bad. Only bankers could think that way. Quite the opposite, this point means that more Americans are receiving their financial services from a not-for-profit financial cooperative—a
  credit union—where they have a voice in choosing the institution’s management, and where people are the focus, not profits. This should be applauded, not criticized. 
• State bankers attempt to make an issue of the fact that federal credit unions (FCUs) do not file IRS Form 990, America’s Credit Unions/state associations wrote. “There is no bigger red herring in the credit union debate. If state bankers want transparency, we would like to remind them that FCUs provide it through their
  quarterly filings with the National Credit Union Administration (NCUA). For example, FCUs file a quarterly Call Report that contains approximately 3,400 fields. These fields include detailed financial data on loans, investments, deposits, income, expenses, and more. They also file Form
  4501A with the NCUA that contains approximately 400 fields on, among other things, product and service offerings, directors, senior staff, branch locations, and key vendors like core
  processors. In contrast, the IRS Form 990 contains approximately 250 fields, many of which overlap with current FCU reporting or supervisory requirements.
• If banks desire is to have greater transparency into tax-exempt institutions, America’s Credit Unions/state associations said it “is important to recognize that one-third of all banks are organized under Subchapter S, meaning they pay no federal income taxes. None of those banks file a Form 990 with the IRS, yet multiple academic studies over the past decade have shown that while tax-exempt credit unions use their tax status to provide more affordable products and lower fees, tax-exempt Subchapter S banks use their tax status to provide a higher return for Wall Street investors.”

‘Purest Form of Hypocrisy’
Finally, the coalition of CU groups said in its letter it wants to highlight the “purest form of banker hypocrisy.”

“The state banker letter begins with a discussion of how credit unions are no longer serving Americans of modest means and then concludes with complaints about credit unions offering wealth management services,” America’s Credit Unions/state associations told Treasury. “Nothing could be more core to the credit union mission of “people helping people” than helping their members save for the future and achieve financial security—including being able to pay for their children’s college or afford retirement. 

“The bankers cannot have it both ways,” the letter continues. “This argument simply lays bare the fact that bankers do not care about helping people, but rather about eliminating competition to increase their own profits.”