Credit Unions Have Tapped Taxpayers' Funds

Credit unions have received taxpayer money, despite statements to the contrary.

Recently, Richard T. Webb wrote Credit Union Times that "[c]redit unions have never cost the tax payers [sic] a single penny and will not going forward."

The comment was made with respect to credit unions being subject to the Consumer Financial Protection Bureau (CFPB) and the controversy over CFPB leadership.

However, this statement fails to take into consideration that credit unions have been beneficiaries of Congressional appropriations.

For example, credit unions can receive funds from the National Credit Union Administration's Community Development Revolving Loan Fund and the U.S. Treasury's Community Development Financial Institution (CDFI) Fund. For example, 56 credit unions in 2017 were awarded $39.5 million in CDFI Funds. Both programs receive taxpayer funding from Congress.

In addition, credit unions can receive free office space and services in government facilities (see Section 1770 of the Federal Credit Union Act). This use of free space constitutes a cost to taxpayers.

For example, a December 18, 2017 blog post noted that the National Labor Relations Board (NLRB) provided space and associated services free of charge to the NLRB Federal Credit Union since it was established in 1938 until 2015. A 2008 NLRB Inspector General report found that in calendar year 2007 the agency provided an estimated $88,778 in support to the credit union.

The Government Accountability Office in 1984 wrote that federal agencies may grant administrative leave to federal employees to render limited support and advice to federal credit unions. This means that federal employees can be excused from their official duties without suffering a loss of pay or leave to provide services to credit unions. This administrative leave is a cost to taxpayers.

In 1987, the Government Accountability Office opined that the Internal Revenue Service could purchase an Automatic Teller Machine for a credit union serving the Atlanta Service Center. This is another example of appropriated funds being used to benefit a credit union and its members.

These examples illustrate that credit unions have tapped taxpayers' funds.

This does not count borrowings from the U.S. Treasury by the National Credit Union Administration associated with the failure of corporate credit unions during the financial crisis and recession or credit unions participating in the Community Development Capital Initiative of the Troubled Asset Relief Program.