GAC Takeaways: Tax Exemption, Interchange, the CFPB and NCUA

Record-setting attendance of more than 6,000 is a nice headline, but it only begins to convey the story. Last week’s Governmental Affairs Conference featured heightened levels of energy and urgency that transcended badge counts- and not for entirely happy reasons. 

Initial excitement over a new administration inclined toward less onerous regulation quickly gave way to what was deemed an “existential threat” more than once, as the race to extend the 2017 tax cuts has brought credit unions’ longstanding tax exemption into the crosshairs. Defending our tax treatment, which is central to the credit union model, became the unifying theme of GAC 2025 and the ensuing Hill Hikes to visit elected representatives.

The business case for credit unions’ “tax exemption” is straightforward- and quite compelling. First off, any claim that CUs don’t pay taxes is misleading, probably intentionally so. Direct taxes (payroll, real estate, etc.) paid by credit unions totaled $12 billion in 2024, according to Americas Credit Unions’ Chief Economist Mike Schenk. By comparison, the “government investment” (in the form of foregone income tax revenue) generates $37 billion of financial benefits to consumers- including non-CU members. (ACU’s Economics team shares more details on our BIGCast interview recorded at GAC.)

Similar facts have successfully defused past attempts by the bank lobby to rescind CUs’ tax status. This cycle poses new messaging challenges, however. As ACU CEO Jim Nussle pointed out, more than half of Congress has turned over since the 2017 tax bill was enacted. Moreover, the “reconciliation process” through which this revamp is being approached eliminates the window for public debate and transparent voting while increasing the risk of a 2am backroom meeting to insert final bill edits to secure the final needed votes. Nussle made clear the time for proactive messaging is now, before the back room horse dealing begins. (Simplified messaging and resources can be found at https://www.donttaxmycreditunion.org/)

Taxes were far from the only meaty topic tackled at GAC, which featured a more robust selection of breakout sessions than past years. Here are a few highlights:

The CFPB’s Future: Despite the shuttering of the bureau’s Washington DC’s office, the CFPB’s actual elimination will require a literal act of Congress. A panel of former CFPB executives offered frank opinions in a lively discussion. One memorable line: “If someone gives you a box of scorpions as a gift, the good thing is that they’re trapped inside a box.” By hollowing out the CFBP, the implication is that the Trump Administration has allowed the scorpions to scatter, where they will pursue a similar agenda from a variety of angles, including State Attorneys General offices.

It was also suggested that March 31 will be a key date for assessing the go-forward approach to rules including Section 1033 (data sharing/open banking) and Buy Now Pay Later. We were also reminded that only a small fraction of credit unions are technically under CFPB supervision, although its rulemaking typically drives broader expectations.  

Interchange Legislation: While the Federal–level Credit Card Competition Act remains a looming threat, recent activity has focused on the state level- where bills limiting interchange in various forms (often on taxes, occasionally on gratuities or charitable donations) are currently in flight in 19 states. Illinois remains the only state to have passed such a bill, through a late-night closed door budget process mirroring the type feared for the Federal tax bill.

The Illinois Interchange Fee Prohibition Act remains tied up in court, even as the complexity of its implementation becomes increasingly apparent to all parties. Government relations experts highlighted two particularly effective lines of reasoning: 1) Interchange is a business-to-business issue, with no reason for legislators to pick winners or disrupt market pricing mechanisms; 2) Enforcement of any of the proposed bills will require a significant level of consumer data to be exposed, triggering privacy concerns.      

NCUA Outlook: America’s Credit Unions strongly supports the NCUA’s continuing status as an independent board, and opposes rumored proposals to fold the NCUA into the FDIC- which like CFPB elimination would require an act of Congress.

Former NCUA Policy Advisor Elizabeth Eurgubian pointed out that the NCUA board is generally collaborative, working together on solutions even when not formally required. Its three-member composition remains the same as before the election (2 Democratic appointees, 1 Republican), with the key difference that GOP appointee Kyle Hauptman has assumed the Chairman’s role. Although he technically remains in the minority Hauptman now controls the agenda- which will likely translate to slower rulemaking.   

Our CU Town Hall discussions have also offered further detail on these topics.