WASHINGTON, D.C. (January 15, 2025) |
The Defense Credit Union Council (DCUC) sent a letter to the Senate Finance Committee addressing concerns ahead of the confirmation of Mr. Scott Bessent as Treasury Secretary.
In the letter, Jason Stverak, DCUC Chief Advocacy Officer stressed the importance of discussing issues central to the financial well-being of our members during the Committee’s confirmation process.
Since their establishment under the Federal Credit Union Act (FCUA) in 1934, credit unions have been recognized as member-owned, not-for-profit financial cooperatives. Their tax-exempt status reflects their unique mission to deliver financial services to underserved communities, particularly military families, at lower costs than for-profit institutions; with structural and operational differences distinguishing them from shareholder-driven banks.
In the letter, DCUC shared the many benefits credit unions provide to their members and local communities including lower costs for members, community reinvestment, financial education programs, support for small businesses, and assistance with affordable housing.
Stverak noted the economic advantages of the credit union tax exemption are profound. “Research demonstrates that for every $1 of tax revenue forgone, credit unions generate an estimated $10 in economic value for members and communities. These benefits include lower loan rates, higher savings returns, and reduced fees, particularly in rural and underserved areas where credit unions often serve as a critical financial lifeline,” says Stverak. “Credit union advocates must continue highlighting this level of impact to policymakers to ensure regulations support credit unions’ important role in America’s financial ecosystem.”
DCUC continues to emphasize how eliminating this tax-exempt status would bring severe consequences for millions of Americans, including service members and veterans.
“Limiting or revoking the credit union tax exemption would inevitably lead to increased financial service costs, reduced credit access, and weakened financial readiness among military and veteran communities,” says Anthony Hernandez, DCUC President and CEO. “It's why we continue to press into this issue as one of our top advocacy priorities on Capitol Hill. Leaders in
Washington need to know the wave of consequences this will bring on American families in an already stressed economy, and especially in underserved communities if they move to reform this longstanding regulation.”
DCUC’s letter detailed the far-reaching impacts of removing the credit union tax exemption, including increased financial burdens upward of an additional $15 billion annually in higher loan rates and reduced savings returns, reduced access to financial services, heightened pressure on government resources, and decreased market competition.
DCUC also urged the committee to support measures enhancing veteran member business lending (MBL). Current statutory caps restrict credit unions’ ability to serve veteran-owned businesses, which face unique challenges in accessing capital. By raising these caps, credit unions can further empower veteran entrepreneurs and contribute to broader economic growth.
“Subjecting credit unions to taxation or undue regulatory burdens would force them to shift focus from service to profit, undermining their founding missions that remain at the core of their purpose today,” adds Stverak. “DCUC remains committed to safeguarding the financial well being of service members and preserving the unique benefits credit unions provide. We trust the Senate Finance Committee will carefully consider these matters during the confirmation process for Mr. Bessent.”
For more information, please contact Jason Stverak at jstverak@dcuc.org and visit dcuc.org/advocacy.