How the credit union movement is gaslighting the public. This article may be freely disseminated and published or re-published without limitation.

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Profiteers of Tax-Exempt Banking
How Credit Unions Became Unions of Discredit
By Carlton Roark
The tax exemption granted to credit unions by Franklin D. Roosevelt in 1934 was part of the
New Deal following the failure of approximately 9,000 banks after the depression. The banking
industry recovered, but what went unnoticed for more than half a century thereafter was the long-
outlived purpose for granting tax-exempt status to credit unions. As a result, the number of credit
unions seeking to profiteer from tax-exempt banking exploded to roughly 9,500 with collective
assets of about two trillion and profits in the tens of billions annually, with many now the size of,
and functioning like, a large bank, but without a similar level of regulatory oversight. The failure
of legislators to strip credit unions of their unjustified tax-exempt status has been a gross
injustice that has caused the rest of society to shoulder more and more of the tax burden.
Credit unions have expended enormous amounts in lobbying to preserve their unfair
advantage profiteering from tax-exempt banking (subsidized ironically by tax-exempt banking)
because they know it’s no longer justified. The absence of any justification lays bare the real
reason that was best articulated in a quote by author Garrison Wynn who said, “All I ever wanted
was an unfair advantage”. When banks raise the issue of unjustified tax-exempt status for credit
unions, credit unions suggest banks convert to a credit union, which is just an invitation to join
credit unions in shifting more of the tax burden to the rest of society. In the world of banking,
credit unions have become the pigs in George Orwell’s Animal Farm who argue, “All animals
are equal, but some animals are more equal than others” when it comes to profiteering from tax-
exempt banking.
Credit unions have become unions of discredit for gaslighting the public into believing
misleading arguments as follows, to support their unfair and unjustified tax-exempt status.
Credit unions argue you have to qualify for membership:
Membership in a credit union is a red herring argument for tax-exempt status because
businesses like Costco and others require memberships but don’t enjoy tax-exempt status. The
qualifications for credit union membership are also a sham. For example, many of the largest
credit unions have what are called community-based membership charters that require you to be
located in the community their branches serve as if all brick-and-mortar businesses don’t already
require that. Other credit unions require a common interest or bond to join, as if customers of
banks and businesses like Lowes, Home Depot, etc., don’t have a common interest or bond. If
you still can’t qualify for membership in a credit union, no problem. Credit unions also have a
backdoor way to qualify you. For example, for many, if not most, credit unions, if you cannot
qualify, but you have someone in your family who does, then you qualify. If that still won’t do
the trick, you can join one of the many obscure nonprofits listed in a credit union’s charter that
will qualify you to join that credit union. In other words, the barriers to becoming a member of a
credit union are no more stringent than the barrier to becoming a member of the Member’s Only
jacket club. If legislators won’t take notice, all other businesses should adopt the criteria used by
credit unions and also seek tax-exempt status.

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Credit unions argue they’re “not for profit, not for charity, but for service”:
Not for profit? - Although tax-exempt, most credit unions must still file a tax return of their
financial activities with the IRS called a form 990. On that tax return is the deceptive line, “Net
Revenue”, the not-for-profit equivalent to, you guessed it, profit. As ancient Greek playwright,
Sophocles said, “Profit is sweet, even if it comes from deception”. Also listed on a credit union’s
IRS form 990 tax returns are the names and salaries of its most highly compensated employees.
For this reason, IRS 990 tax returns are an unmentionable topic of discussion at credit unions
because if rank and file employees discover what some are being paid, it might embolden them
to unionize or demand a share in the tax-free largess.
Not for charity? - Credit unions are not for charity to others, but for themselves in the form
of their unjustified tax-exempt status that places a greater tax burden on the rest of society.
For service? - Unlike banks, credit unions are not subject to the Community Reinvestment
Act which encourages lending in low to moderate-income communities. The greatest service is
to serve those most in need. But alas, credit unions are exempt from this as well, except for the
few credit unions specially designated to serve low to moderate-income communities.
Credit unions argue they’re owned by their members, not stockholders:
Members in a credit union have what are called shares savings accounts that represent their
ownership share in a credit union. However, because those ownership shares aren’t marketable
securities, the owners aren’t considered, and don't have the same rights as, stockholders, and are
not subject to oversight by the Securities and Exchange Commission, both of whom could
intervene in the event of unlawful conduct by a rogue CEO and Board. Credit unions are
primarily regulated by the National Credit Union Administration, a federal agency that would
likely cease to exist if it discovered widespread unlawful conduct in the credit union industry
sufficient to imperil its tax-exempt status.
Credit unions argue their ability to make business loans unlike a bank, is very limited:
While it’s true the aggregate amount of business loans credit unions are allowed to make is
limited to the lesser of 1.75 times net worth or 12.25% of total assets for that credit union, what
they don’t mention is that credit unions can buy participations in business loans from each other,
which are excluded from the limitation, allowing them to originate and hold a significantly
higher volume of business loans than the formula implies, to be more like, you guessed it, a
bank.