Credit unions are supposed to serve the poor, not throw cash at stadium sponsorships

Earlier this year, Mountain America Credit Union — a $17 billion, Utah-based financial institution — purchased the naming rights to Arizona State University’s football stadium for more than $50 million.

Why should that be a big deal to consumers?

Credit unions were first chartered by government nearly 100 years ago to serve individuals of modest means connected by a common bond within a local area — primarily, those who lacked access to basic financial services.

Because of that special mission, credit unions are exempt from paying federal income taxes.

Why credit unions are tax exempt

In 2022, Mountain America received a tax exemption that saved them — you guessed it! — approximately $50 million.

But rather than using this money to expand access to financial services for people of modest means in underserved Utah communities, Mountain America dedicated taxpayer resources to a splashy stadium advertising campaign.

This flies in the face of credit unions’ original mission to serve only those of modest means with common bonds in local areas.

Let's set the record straight: On ASU stadium naming deal

Credit unions are not supposed to be for-profit businesses. They are nonprofit organizations that have a responsibility to their members.

And it’s the members — who, ironically, have no say in how their monies are spent — and taxpayers in both Arizona and Utah who are stuck footing the bill.

Members have no say in marketing

Mountain America’s members don’t benefit if the credit union uses its tax-exempt revenues for marketing instead of lowering members’ interest rates.

In fact, those who profit are credit union executives who demand higher salaries as a result of increased membership. It’s worth noting that, unlike every other nonprofit, credit union executives don’t have to disclose their salaries.

The bottom line: Rather than working as nonprofits to expand financial services to needy customers, credit union leaders are too often shifting resources to marketing so, in Mountain America’s case, they can see their names in bright lights on game day.

This gap between the credit union mission and modern practices has caught the attention of tax policy and consumer protection experts, and even leaders within the credit union industry itself have raised serious concerns.

Congress should offer more oversight

Consumers are also watching.

According to a survey conducted by Morning Consult on behalf of the American Bankers Association, 62% of Americans want Congress to examine whether credit unions are providing enough community benefit to warrant their tax exemption.

Nearly two decades have passed since Congress last held a hearing on credit unions.

It’s time for Congress to conduct proper oversight of this rapidly changing industry to ensure that its present-day activities align with its historic mission.

Paul Hickman is president of the Arizona Bankers Association, and Howard Headlee is president of the Utah Bankers Association. Reach them at phickman@azbankers.org and howard@uba.org.

This article originally appeared on Arizona Republic: Credit unions should serve the poor, not sponsor ASU's stadium