Key findings:

  • The newest member of the board that regulates credit unions received roughly $120,000 in political contributions from the industry and worked as a consultant for its lobbyists until weeks before his swearing-in. After taking the oath of office, he celebrated with those lobbyists at a party they threw in his honor.
  • Advocates portray credit unions as wholesome community lenders that do so much good, they should not be obligated to pay most taxes. Yet the industry is massive and growing quickly. Credit unions hold more than $1 trillion in assets and count 96 million Americans as customers.
  • Credit unions purport to use all of their earnings to benefit members. That’s one reason they’re exempt from many taxes. They have created a massive advocacy machine that costs credit union customers more than $100 million every year and exists mainly to protect that tax break.
  • The lawyers, lobbyists, executives and regulators who lead the “credit union movement” often move freely between roles. The board members who are supposed to protect the system’s financial stability often act as industry cheerleaders, providing grants, marketing tips and consulting services and legal strategies to help credit unions grow.
  • As regulators looked on, key credit unions invested money from throughout the system in risky mortgage bonds. When the investments plunged in value and losses loomed, regulators quietly devised a $19 billion government bailout of the entire credit union system. Credit union customers are still paying for the losses.