Tension has always existed between member-owned cooperative credit unions and for-profit banks in the US. When credit unions were first organizing in the United States in the early twentieth century, the banking industry was opposed, remaining so ever since. Despite the fact that credit unions continue to hold a very small share of the financial services market, banks and bank trade associations consistently put anti-credit union legislation at the top of their agendas.
Due to their status as not-for-profit, member-owned financial institutions with no source of secondary investment capital, credit unions in the United States are exempt from federal and state income taxes (but, not from employment or property taxes). Additionally, credit union members pay income tax on dividends earned through financial participation in the credit union; this is similar to the taxation structure enjoyed by many banks incorporated under Subchapter S of Chapter 1 of the Internal Revenue Code.
Bank holding companies and their affiliates aggressively compete to provide services to credit unions through their ATM networks, corporate checking accounts, and certificate of deposit programs. In 2007, the American Bankers Association barred credit union employees from attending ABA sponsored educational seminars. This includes online classes that require registration. Based upon the pretext that the ABA only wants to serve its members, the American Bankers Association continues to attempt to weaken credit unions and take back the 6% market share that credit unions currently hold.
Credit unions maintain that no matter their size or field of membership, the fact that they are owned by their members and not shareholders makes them fundamentally different than banks