Our Position

Tax-Exempt Credit Unions


  • ICBA urges Congress to end the unwarranted federal tax subsidy of the credit union industry and/or promote increased tax parity between credit unions and community banks.
  • ICBA staunchly opposes credit unions that exploit their tax subsidy and lax regulatory environment to acquire locally based community banks and urges Congress to use its oversight authority to investigate the National Credit Union Administration’s failure to adequately regulate and supervise the industry and to adhere to the original purpose of the credit union tax exemption.
  • ICBA opposes expanded powers for credit union service organizations, which are independently owned, for profit, and not supervised by any federal agency and supports legislation that would provide NCUA with authority to examine third-party service companies.
  • ICBA opposes NCUA’s weakening of safeguards on commercial lending, field of membership and the growing use of credit union subordinated debt, which allows outside investors to exploit the credit union tax subsidy.
  • ICBA supports applying Community Reinvestment Act requirements to credit unions comparable to and with the same asset size distinctions as banks and thrifts and urges states to prohibit the placement of public deposits in tax-exempt credit unions.


The credit union tax exemption is based on an outdated 100-year-old law that has never been revisited. Since that time, credit unions have become larger, more complex, and bank-like in their size, powers, product and service offerings, and fields of membership – a trend that has sharply accelerated in recent years.

It is past time to bring credit unions into the 21st century, revoke their privileged status, and tax and regulate them as we do comparable financial institutions. Credit unions were chartered by Congress to enable people of small means with a “common bond” to pool their resources to meet their basic deposit, savings and borrowing needs.

ICBA and community banks are particularly alarmed by the recent trend of credit unions acquiring banks – effectively “weaponizing” their tax subsidy and lax regulatory standards. Larger, out-of-market credit unions are displacing smaller, locally based community banks and other credit unions, creating an environment that is less competitive, has more systemic risk, and offers fewer choices for consumers and small businesses.

Credit union acquisitions of community banks and their branches have accelerated rapidly, with the last five years seeing approximately a 400 percent increase over the previous five years. These deals transform taxable business activity at community banks into tax-exempt activity at credit unions, thereby shrinking the tax base, not only at the federal level but at the state and local level as well.

Staff Contact

Michael Emancipator

Vice President, Regulatory Counsel

Washington, DC


Aaron Stetter

Executive Vice President, Advocacy and Strategic Engagement

Washington, DC



Christopher Cole

Executive Vice President, Senior Regulatory Counsel

Washington, DC


Related News

NCUA considering ICBA-opposed subordinated debt today

Mar 16, 2023 | NewsWatch Today
With the National Credit Union Administration meeting today on a rule to relax restrictions on issuing subordinated debt, a former NCUA official raised concerns in a recent blog post.

ICBA’s Bolton: ‘Regulatory blind spot’ shows risks of credit union bank purchases

Feb 9, 2023 | NewsWatch Today
ICBA Chairman Brad Bolton wrote in a new op-ed that the nation’s chief credit union regulator recently hinted at one of the problems with the growth of credit union acquisitions of community banks: the threat to U.S. cybersecurity.

NCUA extends credit union interest rate ceiling

Jan 27, 2023 | NewsWatch Today
The National Credit Union Administration board voted to extend the 18% interest rate ceiling for loans made by federal credit unions through Sept. 10, 2024.