Bankers’ “transparency” push is a thinly veiled attack on credit unions

Let’s call this latest lobbying effort what it is: a banking lobby power play cloaked in the rhetoric of “transparency.” As Chief Advocacy Officer of the Defense Credit Union Council (DCUC), I have watched with growing alarm as bank lobbyists on Capitol Hill push to force federal credit unions to file IRS Form 990—an annual reporting form for tax-exempt entities—under the guise of accountability. Forcing federal credit unions to file Form 990 is unnecessary, duplicative, and nothing more than a bank-lobby gambit designed to burden credit unions, not some good-faith reform. It’s a solution in search of a problem. Credit unions, which collectively serve over 144 million Americans nationwide, have been exempt from Form 990 for over five decades by deliberate policy choice. Unlike charitable nonprofits, federal credit unions have no federal income tax liability—every dollar of their earnings is returned to their member-owners or bolsters reserves, not paid out as profit. Congress and the IRS recognized long ago that making credit unions file a Form 990 would provide virtually no new information to regulators. This exemption is not a loophole; it reflects credit unions’ unique mission as member-owned, not-for-profit cooperatives created to serve people of modest means. Since the 1930s, credit unions’ tax status has existed for a reason: to allow these institutions to reinvest earnings in their communities through lower loan rates, higher savings returns, and reduced fees. The banking lobby’s attempts to roll back this long-standing policy “at the behest of those seeking to undermine credit unions’ tax-exempt status” are as transparent as they are self-serving.

The premise behind the bankers’ campaign—that credit unions need a Form 990 mandate for transparency—is utterly unfounded. Federal credit unions are already subject to rigorous oversight and disclosure. Every quarter, they submit detailed Call Reports to the National Credit Union Administration (NCUA), covering roughly 3,400 data points on their loans, investments, deposits, income, expenses, executive compensation, and more. Regulators review this comprehensive data, and much of it is publicly accessible. In other words, credit unions are far from opaque. Forcing them to file Form 990 would yield “no new transparency whatsoever”—it would simply duplicate information regulators already receive, while bogging credit unions down in redundant paperwork. Even IRS officials have acknowledged that since federal credit unions have no taxable income, the only purpose of a Form 990 filing would be to provide public information—not to aid any tax compliance. And that public information is largely already available through existing credit union disclosures and reports. The truth is that this mandate wouldn’t make credit unions more transparent; it would just impose another layer of bureaucracy on institutions that are already among the most transparent and heavily examined in the financial sector.

What would a Form 990 requirement actually accomplish? It wouldn’t inform regulators of anything new—but it would saddle credit unions with significant administrative burdens and costs, especially smaller community-based and defense credit unions. Preparing the extensive Form 990 each year is a costly, time-consuming process that would divert staff time and financial resources away from what credit unions exist to do: serve their members. It’s no exaggeration to say that every dollar a credit union must spend on unnecessary, duplicative compliance is a dollar not returned to members through better rates, lower fees, or community programs. Those real-world impacts can’t be shrugged off. Compliance burdens don’t fall from the sky; they ultimately come out of credit unions’ limited budgets—money that would otherwise be used to offer a lower interest rate on a car loan for a working family, a higher savings yield for a retiree, or a free financial counseling session for a military veteran. DCUC highlighted this exact point in our letter to Congress: “Every dollar spent on duplicative compliance is a dollar not returned to members through better rates, lower fees, or community programs.” Simply put, forcing new paperwork for paperwork’s sake will hurt ordinary people. Mandating Form 990 adds new costs with no benefit, undermining the very purpose of credit unions’ tax status, which is to enable member-owned institutions to focus on service rather than bureaucracy.

If there were a genuine public interest gap that Form 990 filings would fill, regulators or consumer groups would have raised it. They haven’t. This sudden push isn’t coming from the NCUA, the Treasury, or credit union members at all—it’s coming exclusively from bank trade associations and lobbyists. The banking lobby has been shopping this idea around Congress as part of a long-running campaign to saddle credit unions with more regulatory burdens. In fact, reports surfaced that banking trade groups circulated a draft letter urging the Treasury Department to yank the 54-year-old Form 990 exemption. Tellingly, that draft letter was circulated anonymously—no bank trade association even put its name on the proposal, despite all their talk of “transparency”. The bankers’ motives here are crystal clear. They’re not acting on principle or responding to any public outcry; they’re exploiting the language of transparency as cover for a competitive power play. A former federal regulator, NCUA Chairman Dennis Dollar, bluntly described this pattern: bankers have “tried anything they can” for years to handicap credit unions, despite credit unions still holding under 10% of U.S. financial assets while the largest banks control over 75%. This isn’t about credit unions dominating the marketplace—they don’t. It’s about certain banks disliking even a modest cooperative presence that puts consumers first. The banking lobby’s hope is that by piling on compliance costs and public-relations burdens, they can chip away at the credit union model that consumers trust but bank shareholders resent. We’ve even seen the timing of this push expose its true nature: notably, bankers rolled out their Form 990 campaign immediately after credit unions mobilized to help Americans during a recent federal government shutdown. When that shutdown left thousands of military families and federal employees without pay, credit unions across the country sprang into action—offering no-interest emergency loans, waiving fees, and helping families stay afloat. And how did the banking lobby respond? Not with applause, but with an attempt to penalize those credit unions by stripping away their Form 990 exemption as soon as the crisis passed—a “retaliatory penalty” thinly disguised as a call for transparency. The message from Wall Street lobbyists was essentially: How dare credit unions make us look bad by doing good. It’s cynical, it’s hypocritical, and policymakers should see through it.

If bankers truly cared about transparency and fairness, they would start by looking in the mirror. The banking industry has its own array of tax advantages and opaque practices that it isn’t volunteering to relinquish or expose. Consider a few facts that highlight this double standard:

Despite these benefits, bank lobbyists have not offered up their industry for more IRS scrutiny or “accountability” measures. They’re not pushing for a public registry of how banks use their tax cuts, nor are they suggesting banks file new IRS forms about their own executive bonuses or lending practices in underserved communities. Instead, they focus their ire on not-for-profit credit unions. This speaks volumes. The truth is that the campaign to impose Form 990 on credit unions is not driven by any principled stand on transparency—it’s driven by banks seeking a competitive edge by saddling credit unions with costs and red tape. It’s an attempt to undermine the credit union model precisely because that model (by not prioritizing profit) offers an alternative that many consumers prefer. The banking lobby’s narrative conveniently omits context: despite banks’ vastly greater size and profits, it was not the banks that stepped up to waive fees or cut interest rates for ordinary Americans on the verge of hardship during the last crisis—it was the credit unions. That contrast is at the heart of why the banks are lashing out.

If you want to understand why the bankers’ attack is so misplaced, just look at the mission-driven work of America’s defense credit unions—the very institutions my organization represents. These credit unions, based on military installations and serving our armed forces and veterans, exemplify the public good that comes from the credit union model. They routinely “show up” for military families in ways big banks often do not. For example, defense credit unions:

They do all of this not because it’s lucrative (indeed, much of it is provided at no profit), but because it fulfills their mission to serve those who serve our nation. This cooperative, community-first ethos is exactly what Congress sought to nurture by granting credit unions tax-exempt status in the first place. It is the polar opposite of the profit-maximizing approach of banks. Imposing new, unnecessary reporting mandates on credit unions would only weaken these institutions and hamper their ability to serve communities—the very communities that banks often leave behind when there’s no profit to be made. Ultimately, that harm wouldn’t just be felt by credit union members; it would hurt consumers broadly, including many Americans who benefit indirectly from credit unions’ presence pushing banks to offer more competitive rates and services in areas that might otherwise be neglected. The notion that adding a redundant IRS filing requirement will somehow improve things is absurd—it would only pull resources away from these community efforts. We should be applauding and emulating the credit union model of service, not trying to throw sand in its gears.

Requiring federal credit unions to file IRS Form 990 is an unwarranted and counterproductive idea. It offers no meaningful gain in transparency or oversight, yet it would inflict very real costs on member-owned institutions and diminish the value they provide to everyday Americans. Congress has upheld the credit union tax exemption—and the associated reporting exemptions—for decades because they work. These policies enable credit unions to focus on what they do best: serving their members and communities, rather than diverting resources to needless bureaucracy. That balance should not be upended at the behest of profit-driven banks looking to hamstring their not-for-profit competitors. I urge lawmakers in Washington: see this banker-led “transparency” crusade for the smokescreen that it is, and reject it. Instead, continue to support the credit union difference and resist attempts by special interests to erode the policies that allow credit unions to thrive. Doing so will protect millions of consumers—including military families—who depend on credit unions for fair, affordable financial services. We in the credit union movement will not apologize for putting our members and communities first, and we won’t stand idly by while bank lobbyists try to punish us for fulfilling our mission. The bottom line is this: imposing Form 990 on credit unions is a bad-faith tactic that lawmakers should soundly reject. It’s time to stand up for credit unions—and by extension, for the millions of Americans who count on these member-owned financial cooperatives every day.