An important facet of the credit union business model is its tax-exempt status, a situation that has long infuriated the banking industry that has sought to get it repealed.
But bankers have had little success with their entreaties in Congress as supporters of the movement's tax-exempt status cite its deeply-entrenched not-for-profit cooperative structure.
"The credit unions have a strong position on the Hill," said one credit union Capitol Hill source. "Democrats like them because they serve the little guy that the bankers often leave behind. The Republicans like them because they represent small business formed by folks pooling their own money to help each other rather than turning to the government for help."
In addition, it is estimated that taxing credit unions would bring in less than $2 billion annually to the federal coffers while Congress is facing an $18 trillion debt, an elected member of Congress can't see much advantage in teeing off millions of activist members for such a small return.
Dennis Dollar, an Alabama-based credit union consultant and former chairman of NCUA, is confident that CUS are in little danger of losing their tax exemption, particularly if they stay vigilant in pressing their message.
A report from CUNA estimates that CUs' tax-exempt status benefit consumers by some $7 to $8 billion annually.
"My interactions with congressmen and senators on behalf of credit unions have been very positive, and I have confidence that there is little — if any — appetite on either side of the aisle to take on the issue of taxing credit unions," Dollar said, emphasizing that credit unions need to stay active on the legislative front to build on their strong position.
"Congress is the most divided I have seen it during my almost forty years in politics, and that works in favor of credit unions as they fight a defensive battle to protect a tax exemption they already have and which has been in existence since 1934," he noted. "The bankers have to get a partisan and divided Congress to tax a eighty-year-old not-for-profit movement of relatively small institutions with over 100 million members for what would amount to a minimal return that doesn't even register against a federal debt headed toward over $20 trillion before the 2016 elections — not an easy task when all credit unions have to do is keep the bankers, who aren't exactly the most influential industry lobbying Congress in this post-TARP bailout era, out of the taxation end zone. I see the credit unions in a pretty strong position when you look at the lay of the political land in Congress."