Banks Take “Divide and Conquer” Approach to the Hill

As the community banks descend on D.C. this week, with their tactic to divide and conquer, the latest direct threat is to the financial well-being of hardworking North and South Dakotans. Banks are once again trying to divide the credit union movement by size—pushing Congress to tax credit unions with more than $1 billion in assets. But let’s be clear: this isn’t about fairness or consumer protection. It’s about eliminating credit unions altogether. If banks succeed in taxing the largest credit unions today, smaller credit unions will be next.

Here in the Dakotas, credit unions have a long-standing tradition of putting people before profits. More than 500,000 of our friends, neighbors, and local businesses rely on credit unions for fair and affordable financial services. The federal tax exemption allows credit unions to reinvest in their communities—offering lower loan rates, higher savings returns, and personalized service that big banks simply don’t provide.

If Dakota credit unions lose this exemption, the impact will be severe. Families will face higher fees and interest rates, small businesses will lose access to critical lending, and rural communities—already struggling with limited financial options—will be further underserved.

Military families will also take a direct hit. Nationwide, seventy-four military-focused credit unions, many serving bases in our region, provide financial services to over 35 million service members, veterans, and their families. Taxing these institutions is effectively a tax on those who have served our country.

The bankers’ argument conveniently ignores their own taxpayer-funded advantages. They enjoy lucrative tax loopholes, abandon rural communities when profits shrink, and have repeatedly needed government bailouts when their risky decisions backfire. Meanwhile, not a single penny of taxpayer money has ever gone to bail out a credit union.

The financial benefits provided by credit unions are substantial, both nationally and within the Dakotas. In the United States, credit unions offer their members reduced fees, higher savings rates, lower loan interest rates, and dividends, all of which contribute to significant economic value.

In North and South Dakota, these benefits are particularly pronounced. Over a recent twelve-month period, Dakota credit unions delivered over $75 million in direct financial benefits to their members. This translates to approximately $159 per member or $333 per member household in South Dakota, and $112 per member or $236 per member household in North Dakota.

If credit unions were to lose their tax-exempt status, these economic advantages could be significantly diminished, leading to higher costs for consumers and potentially reduced access to essential financial services.

This is a fight that impacts every credit union member across North and South Dakota. If Congress starts taxing credit unions based on asset size, it won’t be long before all credit unions are in the crosshairs. DakCU, alongside America’s Credit Unions, is standing firm against this attack, but we need the voices of our members, leaders, and communities to be heard.

Now is the time to reach out and connect with our representatives and tell them: Credit unions are not-for-profit, member-owned financial cooperatives that exist to serve people, not shareholders. Our tax status isn’t about asset size, it’s about our mission. Protecting credit unions means protecting the financial future of Dakota families, small businesses, farmers, and veterans. Let’s make sure lawmakers hear us loud and clear before it’s too late.

Executive Order Targets CDFI Fund: What It Means for Dakota Credit Unions

Last Friday, President Trump signed an Executive Order titled “Continuing the Reduction of the Federal Bureaucracy,” aiming to streamline government operations by eliminating non-statutory functions and reducing statutory functions to the minimum required by law. Among the entities included in this order is the Community Development Financial Institutions (CDFI) Fund.

This latest action is part of a broader federal effort to downsize government, enhance accountability, and promote local and state control over financial resources. The Department of Government Efficiency (DOGE) has been tasked with identifying waste, fraud, and inefficiencies in federal programs, including those administered through the CDFI Fund.

For North and South Dakota credit unions, this development raises significant concerns. Many of our region’s credit unions have leveraged CDFI certification to expand financial services in underserved communities, support local businesses, and foster economic growth. These resources have been vital in helping credit unions fulfill their mission of providing financial inclusion, particularly in rural and economically challenged areas.

DakCU recognizes the importance of the CDFI Fund and is actively working to assess how this Executive Order may impact its future. While the full implications remain unclear, we are engaging with policymakers, industry leaders, and regulatory agencies to gather more information and advocate for the continued support of credit unions that depend on CDFI resources.

We will continue to monitor this situation closely and provide timely updates as more details emerge. In the meantime, we encourage our credit union leaders to stay informed and be prepared to engage in advocacy efforts to protect this critical source of funding for community-based financial services.

If you have any questions or concerns, please reach out to the DakCU advocacy team—we are here to support and represent you every step of the way.