In a recent op-ed, two community bankers – including a past chairman of the Independent Community Bankers of America – painted a dire picture of credit unions “draining” local communities by acquiring small banks.

They argue policymakers should crack down on these credit union acquisitions, claiming that tax-exempt credit unions misuse taxpayer subsidies and abandon their mission. Nothing could be further from the truth. In reality, when a community bank chooses to sell to a credit union, it’s often a lifeline for that community, not a loss. These voluntary sales are not hostile takeovers; they are negotiated, board-approved partnerships by willing sellers who’ve decided a credit union is the best steward for their customers and employees. Far from “darkening” communities, credit union acquisitions tend to preserve hometown banking services that might otherwise disappear.

Let’s be clear: blocking a community bank’s sale to a credit union doesn’t keep the lights on at that bank – it just ensures the branch goes dark for good. Across the country, community banks are under pressure from big-bank competition and consolidation. By contrast, credit unions are member-owned, not-for-profit cooperatives with a mission to serve people, not maximize profit. When a credit union steps in to buy a local bank, what stays behind is what matters most: a locally governed financial institution that knows the community and puts people first. In fact, while large banks have shuttered over 19,000 branches nationwide since 2012, credit unions have been opening new branches – filling service gaps rather than creating them. Time and again, credit unions step in where profit-driven banks pull out, whether in rural counties or small towns, preventing would-be banking deserts.

Critics fling around sensational stats to imply a “wave” of credit union takeovers, but the data tells a different story. Since 2012, fewer than 0.3% of U.S. banks have been acquired by credit unions – a negligible share of all banks. In the same period, more than 2,000 bank-to-bank mergers have taken place. If communities are losing local banks, the real culprit is the banking industry’s own consolidation frenzy – not the handful of sales to credit unions.

And unlike those typical bank mergers that often lead to out-of-state owners and layoffs, a bank selling to a credit union usually keeps branches open, retains employees, and converts customers into member-owners with better rates and lower fees. The alternative scenario is all too familiar: a small bank gets bought by a mega-bank, which then slashes local jobs and closes branches to boost Wall Street profits. Credit union acquisitions prevent that harm and keep local banking local, which is exactly why so many community bank owners choose credit union partners in the first place.

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Banking industry lobbyists love to claim credit unions have strayed from their mission, but the facts prove otherwise. Credit unions have never wavered from their congressionally mandated purpose: serving everyday people and underserved communities. They are democratically governed by their members, not beholden to Wall Street investors. Profits aren’t siphoned off to distant shareholders; they’re returned to members through lower loan rates, higher savings yields, and community programs. And growth hasn’t changed this fundamental character one bit. A credit union with 500,000 members is just as member-focused and nonprofit as one with 500 members – the only difference is scale, which lets credit unions compete with the big banks while still putting people over profit.

Look at where credit unions operate and whom they serve. Over 70% of all credit union branches are located in low- or moderate-income areas, far outpacing banks in reaching those communities. Credit unions also provide vastly more small-dollar loans at affordable rates than banks do, sparing working-class borrowers from predatory payday lenders. Many even specialize in serving those who serve our country: on military bases and in veterans’ communities, defense credit unions support junior enlisted service members and veterans facing unique financial challenges. These are hardly institutions “abandoning their mission” – if anything, credit unions are doubling down on it. While banks chase big profits and pull back from less affluent neighborhoods, credit unions continue to fulfill their social purpose by reaching the Americans that banks often leave behind.

Even as credit unions fortify their own practices, we know that truly turning the tide on fraud will require action beyond our walls. This is where advocacy and legislative solutions come into play. A key example is the push for new tools at the federal level to help stop scams before they spread – and here, DCUC has been leading by voice and example on behalf of defense credit unions and our members.

One promising legislative effort now making its way through Congress is the Task Force for Recognizing and Averting Payment Scams (TRAPS) Act. This bipartisan bill, introduced in June, would establish a coordinated federal task force focused specifically on combating payment scams. DCUC worked closely with lawmakers in the lead-up to this bill, and we applaud the senators behind it for tackling the issue head-on. Why does TRAPS matter? Because it would strengthen the systematic response to scams by bringing all the key players to the table – regulators, law enforcement agencies, and industry representatives (including credit unions) – to share data on the latest fraud trends and recommend concrete solutions. Importantly, the task force would include an NCUA (credit union regulator) representative and a credit union industry expert, ensuring our members’ perspective is heard in devising national anti-fraud strategies. In short, this legislation recognizes that stopping fraud “requires the combined expertise of the entire financial ecosystem”, from law enforcement to frontline institutions.

DCUC has thrown its full support behind the TRAPS Act. In our public statement, we noted that “payment scams targeting military families are on the rise, and credit unions are often the first line of defense”. This bill, we stressed, “gives credit unions the tools they need to detect, stop, and report fraudulent transactions before the damage is done”. In practical terms, TRAPS would empower financial institutions to pause suspect payments when fraud is suspected and to work more seamlessly with law enforcement – actions that today can be hampered by liability concerns or lack of inter-agency coordination. By creating clearer safe harbors for institutions acting in good faith to block scams, and by improving information-sharing across agencies, this legislation would help us intervene earlier and more effectively when members are being scammed. DCUC strongly supports this kind of commonsense solution and is urging Congress to advance the TRAPS Act as quickly as possible.

Of course, our advocacy doesn’t stop at one bill. We’re also pushing for tougher enforcement and penalties against the perpetrators of fraud. In letters to lawmakers, DCUC has recommended directing the Department of Justice and others to prioritize going after those who defraud seniors and servicemembers, including harsher penalties for criminals who target military or elder communities. Financial predators must know that exploiting our veterans or grandparents will bring serious consequences. We’ve likewise supported efforts like the Senior Safe Act and the Stop Senior Scams Act, which encourage better reporting of elder fraud and training of employees to spot exploitation. And importantly, we caution policymakers to avoid any changes that might inadvertently hamstring credit unions’ ability to protect members. For example, proposals that force payment networks with weaker fraud controls, or broad mandates that don’t distinguish legitimate scams, could diminish existing fraud safeguards. DCUC’s message is that new laws should build upon – not undermine – the strong fraud mitigation frameworks community lenders have developed.

All these advocacy efforts boil down to a simple goal: ensuring credit unions have the backing and tools to keep their members safe. Whether it’s working with regulators on better rules, pressing Congress for laws like the TRAPS Act, or partnering with organizations like AARP on consumer education, DCUC is actively engaging on every front. We know collaboration is key. That’s why we’ve offered to serve on any interagency task forces and to share the on-the-ground insights from our member credit unions’ fraud teams. Lawmakers and regulators have an open invitation – you have in DCUC and the credit union movement a willing partner and resource to develop effective, common-sense policies that protect consumers. We truly are all in this fight together.

At the heart of the bankers’ critique is the claim that credit unions’ tax status gives them unfair advantages – a tired talking point that wilfully ignores context. Yes, credit unions are exempt from federal income tax by design. That policy dates back to 1934, when Congress recognized that not-for-profit, member-owned cooperatives deserved a different tax treatment than profit-driven banks. This isn’t a “loophole” or some recent gimmick; it’s a reflection of credit unions’ community-oriented mission. And remember: credit unions still pay plenty of other taxes. They pay property taxes, payroll taxes, sales taxes, and more – contributing millions to state and local coffers every year.

Meanwhile, many banks enjoy lavish tax breaks of their own. More than 2,000 banks – including dozens in states like Louisiana – exploit the Subchapter S loophole to avoid corporate income taxes entirely. In 2022, that tax dodge saved those banks an estimated $1.8 billion. You won’t hear bank lobbyists highlighting that when they complain about credit unions’ tax status. And here’s another fact bankers conveniently omit: when a bank does sell to a credit union, the transaction itself often triggers a one-time tax windfall for the public. The selling bank’s shareholders pay capital gains taxes on the sale, which can exceed the income taxes that bank would have paid for years. The credit union buyer continues paying property and payroll taxes in the community, and its member-owners keep paying taxes on their incomes and purchases. In short, there’s nothing “tax-free” about these deals – they generate revenue and keep services local. If fairness is the concern, let’s examine both sides of the ledger. It’s blatantly disingenuous for banks to cry foul about credit unions’ tax exemption while they quietly pocket their own tax breaks.

The most important point is this: banks selling to credit unions helps communities far more than it could ever hurt them. The true threat to local access to financial services has been the mass disappearance of community banks due to mergers and acquisitions within the banking industry itself. Some critics suggest there’s a “wave” of credit union purchases, but in reality such deals are exceedingly rare. As noted earlier, fewer than 0.3% of banks have been acquired by credit unions in the past decade, versus thousands of bank mergers in that time. If we’re worried about the decline of local banks, let’s focus on the real cause: big-bank consolidation, not a handful of credit unions stepping up to save community institutions. Lets be honest this isn’t a worry about the banks for their communities but about the banks trade associations losing dues paying members.

When a bank sells to a credit union, the outcome is typically positive for the community: employees keep their jobs, branches remain open, and customers suddenly become member-owners who can vote on how their financial institution is run. They also tend to get better rates and lower fees as part of a member-owned cooperative. Contrast that with what often happens when a small bank is bought by a large out-of-town bank: branches get shuttered and longtime customers become just account numbers in a faraway megabank’s ledger. Credit unions keep the decision-making local and the doors open. Rather than harming communities, these sales frequently prevent harm – preventing layoffs, preventing branch closures, and preventing the erosion of local economic ties. Far from draining communities, credit unions strengthen them by ensuring continued access to financial services and community investment.

Perhaps the biggest irony in this debate is how completely out of touch the banking lobby is with the public’s wishes. While bank lobbyists rail against credit unions and lobby Congress to clip their wings, American voters are firmly siding with credit unions. A new nationwide GrayHouse poll found that 62% of voters support removing the federal cap that limits credit unions’ small-business lending. Only 20% are opposed to letting credit unions lend more to local entrepreneurs. This support isn’t partisan or niche; it cuts across the political spectrum. Roughly 71% of Republicans, 59% of independents, and a majority of Democrats want to lift the cap and empower credit unions to help more small businesses. In today’s polarized climate, that kind of agreement is a landslide consensus – a loud-and-clear mandate from Main Street.

And yet, the banking industry stubbornly refuses to listen. Bank lobbyists have fought tooth-and-nail to keep the credit union member business lending cap in place since it was imposed in 1998. The American Bankers Association has bluntly stated that “America’s banks remain opposed to all efforts to change” the cap restrictions. In other words, no matter how much sense a reform makes, the banks’ answer is no. They even trot out absurd arguments to justify this obstruction. In the very op-ed under rebuttal, bank executives derided credit unions’ push to raise the lending cap as a “smokescreen” to let “the largest and fastest-growing credit unions… expand their taxpayer-subsidized turf”. According to them, letting credit unions make more business loans isn’t about helping small businesses at all – it’s just credit unions scheming to grab market share. What a cynical take. This narrative might thrill bank shareholders, but it completely collapses under scrutiny. Why would over three-fifths of American voters support lifting the cap if it were just a ploy to benefit a few giant credit unions? The obvious answer is that ordinary people see through the banks’ self-serving rhetoric. Voters understand that the 12.25%-of-assets lending cap is an arbitrary, outdated rule that stifles economic opportunity. They know that credit unions often provide lower rates and more flexible terms to small businesses than banks do, and that credit unions are frequently willing to lend when big banks won’t. In communities starved for capital, the credit union lifeline is desperately needed – and the public wants that lifeline strengthened, not weakened.

Nothing illustrates the banking industry’s tone-deaf hostility better than its stance toward the Veterans Member Business Loan Act. This bipartisan bill (with both Republican and Democratic sponsors) is a commonsense proposal to exempt loans made to veteran-owned small businesses from the credit union lending cap. Essentially, it would free up additional capital specifically to help military veterans start and grow their own businesses – without costing taxpayers a dime. One would think even the most hard-hearted bank lobbyist would have the decency to support a measure aiding those who served our country. Yet the banking trade groups have been fighting even this modest reform behind closed doors. They view any relaxation of the lending cap, even just for vets who sacrificed for our nation, as a threat to their turf. It’s galling. How can the banking industry wrap itself in platitudes about “supporting our veterans” on one hand, while actively working to deny veteran entrepreneurs access to credit on the other? How can they claim to champion local communities, while opposing a bill that would channel more capital to veteran-owned mom-and-pop businesses in those very communities? This is rank hypocrisy, plain and simple, and it hasn’t gone unnoticed. Veterans’ advocates and credit union leaders have rightly called out the industry for its two-faced posture. If bankers are going to talk about patriotism and community, they should try practicing it – by getting out of the way of legislation that would help veteran-owned small businesses thrive.

The bottom line is that credit unions aren’t the enemy of community banks or local economies – they are often the saviors. Banker lobbyists can spin tall tales about “taxpayer-subsidized acquisitions” and concoct doom-and-gloom scenarios, but the facts demolish their narrative. Credit unions acquire only a tiny fraction of banks, and when they do, communities retain financial services instead of losing them. Credit unions are steadfast in their public-service mission, delivering affordable credit in areas and to people that banks habitually underserve. And now we know the public is overwhelmingly on the credit unions’ side when it comes to expanding access to small-business loans. The bankers’ opposition to lifting the member business lending cap – and even to a veteran lending carve-out – reveals an industry out of step with public need and out of touch with public opinion.

Policymakers should take note. Rather than entertain the banks’ special-interest crusade to hamstring credit unions, our elected officials would do well to listen to their constituents. Voters recognize that credit unions are a lifeline for small businesses and local communities. It’s past time to end the arbitrary restrictions that banks have imposed on credit unions’ ability to serve Main Street. Enacting the Veterans Member Business Loan Act would be a terrific first step, immediately unlocking capital for veteran entrepreneurs who have earned our support. Beyond that, lifting the wider cap on credit union business lending would unleash even more economic growth and empower community lenders to do what they do best: put people before profit. Bank lobbyists might not like it, but the people and communities of this country certainly will.

It’s high time we stop letting the narrow interests of for-profit banks stand in the way of progress that Americans clearly want. In the fight between banker-driven narratives and real community needs, credit unions – and the people they serve – are going to come out on top.