Preferential tax status
Credit unions were established by Congress in the 1930s to provide small-dollar loans to people of modest means. Membership in a credit union was limited to individuals with the same type of job or occupation; from the same community; or another type of "common bond." To encourage lending to people of modest means, Congress exempted credit unions from federal income taxation. Over time, credit unions were allowed to expand their lending to provide car loans, mortgages and even certain types of loans to small businesses. The focus on people of modest means has faded as credit unions were allowed to expand their membership beyond the traditional common bond requirement to virtually anyone who wanted to join.
Over the years, credit unions have expanded and provided more kinds of loans to more people; however, they are still not subject to federal corporate income taxes. Congress needs to re-examine whether it is still appropriate to grant this $1 trillion industry the blanket exemption from federal income taxation.