I’m on the Coop Development website (www.cdf.coop) –they have links to credit union-related things. I’m trying to understand the different credit union associations.

1. Credit Union National Association (CUNA) “is the premier national trade association serving credit unions. Ninety percent of America's credit unions are affiliated with CUNA.”

2. CUNA MUTUAL GROUP “is the leading provider of financial services to credit unions and their members worldwide, offering lending, protection, financial, employee and member solutions through strategic partnerships, technological innovations and multiple service channels. The mutual insurers of the CUNA Mutual Group are owned by their policyholders and operate to serve their best interests.”

3. The National Association of Federal Credit Unions (NAFCU): “The National Association of Federal Credit Unions is a respected and influential trade association that exclusively represents the interests of federal credit unions before the federal government and the public. Membership in NAFCU is direct; there are no state or local leagues, chapters or affiliations standing between NAFCU members and the NAFCU headquarters in Arlington, VA…NAFCU provides its members with representation, information, education, and assistance to meet the challenges that cooperative financial institutions face in today's economic environment. The association stands as a national forum for the federal credit union community where new ideas, issues, concerns and trends can be identified, discussed, resolved.”

It seems NAFCU is focused on federal, as opposed to state, credit unions and on various kinds of legislation to protect federal credit unions. In the 1970’s they won the creation of federal share insurance for federal credit unions (the National Credit Union Share Insurance Fund). Since then, these have been their accomplishments:

a separate federal regulator (the National Credit Union Administration);

a central bank for liquidity purposes (the Central Liquidity Facility);

expanded powers for credit unions (including mortgage lending, share drafts, and variable-rate accounts);

expanded fields of membership, so more consumers could be served by credit unions;

a lessened regulatory burden on credit unions;

preservation of federal credit unions.

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I learned some things from the CUNA website about the struggle over whether credit unions should be tax exempt (which they currently are, at least on the federal level):

“The House Ways & Means Committee, chaired by Congressman Bill Thomas (CA-22) held an oversight hearing on the credit union tax-exempt status on November 3, 2005. Regulatory agencies & academic witnesses, as well as industry representatives testified. This included not only CUNA and another credit union trade association, but also witnesses from the American Bankers Association, America’s Community Banks, and the Independent Community Bankers Association. Chairman Bill Thomas closed the hearing by stating that he would not try to subject credit unions to federal taxation. On November 17, 2005, CUNA submitted a follow up letter that addressed some of the banker attacks in the hearing that required a more detailed response.

Chairman Thomas did put credit unions on notice that he expected greater “transparency, accountability and verifiability,” particularly in regard to such issues as the filing of Form 990s (and the compensation disclosures therein) for all credit unions and in measuring credit union service to people of modest means. On this latter point he was critical of the NCUA and the movement for not having a more precise definition of modest means. He made it clear that while in the 1930s that term may have applied to a broad middle class that lacked access to affordable financial services, today he believes modest means encompasses service to those with low-income, women and minorities. He is in favor of a data collection and reporting mechanism, whether CRA or otherwise, to measure credit union service to these groups, and he believes the movement should support this as a means of verifying that our tax-exempt status continues to be deserved. Structural arguments for the tax exemption are secondary in the Chairman’s estimation.

Chairman Thomas was critical of the NCUA for what he called its unwillingness to recognize the benefit of data collection that provides the transparency and accountability that he says a tax- preferred movement like credit unions ought to have. Near the hearing’s conclusion he said of the NCUA: “I am concerned that an agency that is supposed to be a regulator is an enabler.”

No legislation has been introduced in the 109th Congress on the federal tax-exempt status of credit unions. However, CUNA continues to be on guard against any Congressional legislation that would seek to tax credit unions as a means of offsetting the cost of tax relief, deficit reduction, or hurricane cleanup. Such taxation would end up in a net loss of revenue to the federal treasury as well as hurt hurricane victims.”

Im wondering: On what grounds did credit unions get tax-exempt status? What is the history of that?