Every few years, the banking lobby dusts off the same tired script and launches a new campaign attacking credit unions. This week’s edition comes courtesy of the Independent Community Bankers of America (ICBA), which unveiled a flashy new effort accusing credit unions of “deception” and claiming they do not do enough to serve underserved communities or provide home loans.

If ICBA wants to talk about illusions, perhaps we should start with the biggest one of all: the idea that this campaign has anything to do with protecting consumers or helping underserved communities.

It doesn’t. It’s about protecting bank profits.

Let’s unpack the reality behind the rhetoric.

The Cooperative Model Banks Can’t Compete With

Credit unions are not-for-profit financial cooperatives owned by their members—not Wall Street investors. That means earnings go back to members through lower loan rates, higher savings returns, and fewer fees. There are no quarterly earnings calls and no shareholders demanding maximum profit.

Banks, on the other hand, exist to generate returns for investors. That fundamental difference is exactly why Congress granted credit unions their tax status decades ago—and why consumers continue to choose them.

So when ICBA complains about credit unions growing or succeeding, what they’re really saying is that a member-owned model is competing effectively against shareholder-owned banks.

Apparently competition is fine—unless consumers benefit.

The Hypocrisy of the “Tax Fairness” Argument

ICBA loves to talk about “tax fairness.” But this argument collapses the moment you look at the facts.

Thousands of community banks operate under Subchapter S status, allowing owners to bypass corporate taxation entirely and pass profits directly to shareholders. In other words, many of the same banks complaining about credit unions’ tax status enjoy tax advantages themselves.

Yet those same institutions now want Congress to believe they are suddenly champions of fiscal purity. That’s not a policy argument. That’s hypocrisy. Credit unions’ tax treatment reflects their structure: cooperative institutions that return value directly to members rather than distributing profits to investors.

Banks know this. They simply don’t like competing against it.

The Myth That Credit Unions Don’t Serve Underserved Communities

ICBA’s campaign claims credit unions are failing underserved communities. The data tell a much more nuanced—and inconvenient—story.

For example, research based on Home Mortgage Disclosure Act (HMDA) data shows 27% of credit union mortgage loans go to low-income borrowers, slightly higher than the 26.1% share among non-credit-union lenders.

Credit unions also originate a larger share of mortgages to minority borrowers than small banks in some markets. Those numbers matter because they highlight a simple truth: credit unions serve the communities that banks often overlook. And let’s be honest about who those communities include. Military families. Rural Americans. Working-class households. People who don’t always fit neatly into a bank’s ideal credit profile.

That’s exactly why defense credit unions exist—and why millions of Americans rely on them.

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Mortgage Lending: The Facts Banks Don’t Mention

ICBA’s campaign also claims credit unions fall short in mortgage lending. Again, the facts tell a different story. Studies analyzing HMDA data show that credit unions equaled or outperformed banks in 74% of mortgage lending performance metrics related to consumer outcomes.

In addition, credit unions typically offer lower average mortgage costs than banks or mortgage companies, reflecting their not-for-profit structure. That means real savings for families trying to buy a home—especially first-time buyers and military families navigating frequent relocations. Banks don’t like that reality because it undermines the narrative they’re trying to sell policymakers.

The Acquisition Argument Is a Red Herring

Another favorite talking point in the ICBA playbook is credit union acquisitions of banks. Let’s put that in perspective. First, these transactions represent a tiny fraction of the thousands of financial institutions operating in the United States. Second, in many cases credit unions step in when banks decide to exit markets or sell charters. In those situations, credit unions often preserve local branches and services that might otherwise disappear. If ICBA truly cared about community access to financial services, they would welcome solutions that keep those services alive.

Instead, they attack the institutions willing to step in.

The Real Reason Behind the Attacks

So why is ICBA escalating this fight now? Because the cooperative model works. Credit unions consistently rank among the most trusted financial institutions in America. They provide competitive loan rates, fewer fees, and a mission rooted in service rather than profit. That makes them incredibly popular with consumers—and deeply frustrating for competitors who would prefer fewer alternatives in the marketplace.

When banks talk about “tax fairness,” what they really mean is they want to eliminate the cooperative model that forces them to compete harder.

A Final Reality Check

Credit unions aren’t perfect. No financial institution is. But the idea that member-owned cooperatives serving 140 million Americans are somehow deceiving the public is absurd. Credit unions exist because traditional banks historically left millions of Americans behind. They continue to exist because millions of Americans still prefer a financial institution that works for them—not for shareholders.

If ICBA wants to talk about illusions, perhaps they should start by looking in the mirror. Because the real illusion here isn’t credit unions. It’s the banking lobby’s attempt to convince policymakers that a cooperative financial model serving millions of Americans is somehow the problem.