By Johnathan Bender
Already serving over 122.3 million members throughout the United States and with over $1.5 trillion in assets, credit unions (CU) have successfully competed with both small and large commercial banks for consumers over many decades. As the CU membership field requirements are being relaxed and the services offered are being expanded, banks have continually questioned whether CUs have drifted too far from their original purpose to justify their tax-exempt status. Thus far, banks have lobbied against the CU membership expansion and tax exemptions without success.
In 2016, the National Credit Union Association (NCUA) amended its membership field rules for federally chartered community credit unions (CCU) by broadening the “local community” or “rural district” requirement definitions. This reignited the concerns of community banks (CB) regarding the increased competition for consumers and profitability, especially in California, where state-chartered CUs already provide tax advantaged competition. The American Bankers Association (ABA) quickly filed a suit challenging these definitional amendments under an Administrative Procedure Act violation theory. After a federal appellate court upheld the NCUA’s expanded CCU limitations, the ABA appealed to the Supreme Court and was denied certiorari. As a result, CBs in California face increasing direct competition with both state and federal CUs, both of which reap state and federal tax exemption benefits.
In this article, I will address the history of CUs, the expansion of the CU member field and common bond requirements, the tax exemption advantage, and how the expansion and tax advantage impact the banking industry; finally, I will recommend a solution in favor of preserving small banks while furthering the CU goal of lowered costs of and increased access to capital for consumers. Ultimately, I will explore the impact of statutory and administrative law on the consumer financial system and identify an opportunity that these laws have created.
II. Credit Unions & The Membership Field Expansion:
A. Federally Chartered Credit Unions
In the 1930s, low and middle-income Americans struggled immensely to obtain credit as a result of the Great Depression. To alleviate this issue, President Franklin D. Roosevelt signed the Federal Credit Union Act (“the Act”) into law in 1934. The objective being:
“To establish a Federal Credit Union System, to establish a further market for securities of the United States and to make more available to people of small means credit for provident purposes through a national system of cooperative credit, thereby helping to stabilize the credit structure of the United States.”
Principally, the Act sought to create an alternative to loan sharks for working-class Americans seeking credit by creating cooperative credit; “to make credit more available to people of small means and to promote thrift among credit union members.” CUs aim to provide the desired lower credit rates through a member-ownership, not-for-profit model that achieves a tax-exempt status. In this model, the profits, including tax expense savings, are returned to CU members in the form of often smaller fees, lower loan interest rates, and higher savings interest rates in comparison to traditional banks.
In an effort to “be more responsive to the needs of credit unions” and “provide more flexible and innovative regulation,” Congress created the NCUA to administer the Act in 1970. Eventually, a question of interpretation regarding the Act arose during the mid-1990s in NCUA v. First Nat’l Bank & Tr. Co., 522 U.S. 479 (1998). The Act originally limited CU membership to “groups having a common bond of occupation, or association, or to groups within a well-defined neighborhood, community, or rural district.” Since 1982, the NCUA has interpreted a combination of unrelated employer groups, in which each group had its own common bond of occupation while lacking a common bond with other members of the same CU, to fit within the Act’s common occupation bond definition. Banks large and small, threatened by the expanding size of CUs, interpreted the statute to require that every member share the same common bond: a subgroup unified by a particular bond could not be combined with other subgroups that are unified by different bonds and still satisfy the common bond requirement. In other words, the NCUA would allow a group unified as plumbers and a group unified as welders to satisfy the occupational common bond requirement for the same CU, whereas the banks’ interpretation would only allow other plumbers to be unified by occupation with other plumbers. The Supreme Court held the banks’ interpretation to be correct: groups seeking CU membership were required to have the same unifying bond as all other members of the CU. Groups or aspiring members lacking that singular bond could not become members regardless of the different bonds they shared with others.
Within the same year, Congress passed the 1998 Credit Union Membership Access Act (1998 Act) to legislate over the universal common bond requirement from NCUA v. First Nat’l Bank & Tr. Co.,with the creation of multiple-common bond CUs. Various members of a single CU could once again satisfy the Act’s common bond requirement by sharing a common bond with only some of the other members. For example, a steelworkers’ group and a dairy farming group fail to share an occupational common bond with each other, but an occupational bond is present within each group. Because each group has an occupational bond present within their individual group, the two groups could be members of the same multiple-common bond CU. Additionally, the 1998 Act limited CCU’s membership field to “[p]ersons or organizations within a well-defined local community, neighborhood, or rural district.” Previously, CCU membership was statutorily limited to a “well-defined neighborhood, community, or rural district.” The 1998 Act changed that phrase with the additional qualification that the neighborhood, community, or rural district be “local” and directed the NCUA to further define limitations through regulation.
The NCUA quickly released three requirements to qualify as a CCU (1) “the proposed area [of service] must have clearly defined geographic boundaries;” (2) “the applicant must demonstrate that the proposed area falls within a well-defined local community, neighborhood, or rural district;” and (3) “the residents of the area must have common interests or interact.” By 2013, the NCUA had promulgated an expanded definition for the local community or neighborhood and rural district requirements: a single political jurisdiction or any contiguous portion thereof; or a core-based statistical area or metropolitan division with a population not exceeding 2.5 million people, or a portion thereof containing the core of that area. A rural district was defined as: an area with the greater of a population equal to or under 250,000 or 3 percent of the population of the state in which the district is located and either (a) defined contiguous geographic boundaries, (b) a population that mostly lives in areas designated as rural, or (c) a population density of no more than 100 persons per square mile.
i. The Community Bond Member-Field After American Bankers Association vs. The National Credit Union Administration (2019)
In 2016, the NCUA again updated its requirements for CCUs. This update provided four changes that further expand the member field regarding the local community and rural district requirements. The first change automatically qualified any contiguous portion of a Core-Based Statistical Area as part of a local community as long as the portion’s population does not exceed 2.5 million people. This effectively removed the requirement that a Core-Based Statistical Area includes the core of a local community to be considered part of that community. Second, the 2016 rule adds a new category, Combined Statistical Areas with a population of equal to or less than 2.5 million, to the list of communities that automatically qualify as belonging to a local community. Third, the rule created the ability for CCUs “to apply to add areas adjacent to a portion of a Single Political Jurisdiction, Core-Based Statistical Area, or Combined Statistical Area that they already serve . . .” to their qualifying local community area. After the 2013 expansion of the rural district population limit, the NCUA again increased the rural district limit to one million people in 2016 but eliminated the alternative population limit of three percent of the state in which most of the district is located.
The ABA immediately challenged all the new rules except for the one allowing CCUs to apply for the addition of areas adjacent to locations they already serve. In the district and appellate courts, the ABA claimed that the changes described above were arbitrary and capricious under the Administrative Procedure Act (APA), as well as undeserving of deference under the Chevron doctrine. In determining that the local community requirement was sensibly read by the NCUA because Congress did not prescribe a particular geographical limit to the word “local” nor specify a population limit, the court held that the addition of Combined Statistical Areas to qualified member fields and the increase of the rural district’s administratively created population limit were valid. Furthermore, the court opted to remand the issue of eliminating the need for a Core-Based Statistical Area to include a core to allow for the NCUA to provide support for the change without vacating. The ABA once more appealed, the Supreme Court denied certiorari.
B. California State Chartered Credit Unions – Additional Pressure
CUs are no stranger to the Golden State. California is home to over 300 total CUs, including 123 state CUs. California state CUs are regulated by The Office of Credit Union under the California Department of Financial Protection and Innovation. Similarly to state-chartered banks, whose deposit insurance is provided through the Federal Deposit Insurance Corporation (FDIC), state CU deposits are also insured by a federal government entity, the NCUA, and are thus also subject to certain NCUA requirements.
Member field limitations for California state CUs are similarly or sometimes less strict than those established and weakened by the NCUA in 2016. California has four basic forms of eligible groups for state CU membership: (a) groups based upon a common bond of occupation; (b) groups based upon a common bond of association; (c) groups within a well-defined neighborhood, community, or rural district;” and (d) immediate family of current members. This expansive view on membership limitations has created many statewide “open-for-all” state CUs. For example, one of the largest CU’s in California allows membership to anyone who lives or works in the state, non-California residents who are a family member or registered domestic partner of a current member, or any member of one of nearly 1,000 Select Employee Groups.
C. Community Banks
CBs are relationship bankers who “focus on providing traditional banking services in their local communities . . . obtain most of their core deposits locally. . . and make many of their loans to local businesses.” Typically, CBs are distinguished from larger banks by their specialized knowledge of the industries and customers within their localities. These banks are mostly found in smaller markets with populations of less than fifty thousand but are present throughout the country. In comparison to large banks, most CBs lack national and international branches or free ATM access outside of their community. Additionally, CBs provide fewer financial services than large banks as they often focus on a particular type of loan market and refrain from providing brokerage or other investor features. Large banks typically possess cutting-edge banking technology such as mobile banking applications while CBs tend to adopt new technology at a slower rate due to smaller budgets or the practicalities of their markets.
III. Competing for Consumers: Community Banks vs. Credit Unions
The consumer bases of CUs and banks have increasingly begun to overlap because CU membership field limitations are weakening. In American Bankers, the decision to sustain the NCUA’s weakening of the community bond restrictions for CCUs increased competition with banks that operate in previously unqualified localities. With respect to the new population limit for rural districts of one million, CBs serving smaller populations face a greater threat of expanding CCUs absorbing their clients, particularly due to their limited-service area and community-oriented business model. Thus, banks already in competition with non-community CUs in many territories before the 2016 expansion face an elevated threat due to the weakened member requirements for CCUs.
IV. Calls for Reform
Two concerns arise from the evolution and the resulting growth of CCUs. First, there is fear that CBs are struggling to compete, causing them to vanish due to the CUs’ tax advantages, and that, as historical trends show, further expansion will continue and eventually push this competition up the chain until large banks are threatened or protected by changes in legislation. An increased shift of consumers to tax-exempt CUs, CU’s rapid expansion and subsequent acquisitions of smaller banks at a premium, and the resulting decreased bank utilization, in general, would negatively impact government tax revenues from the financial services industry, as well. Secondly, there is a macroeconomic concern that the tax exemption for CUs facilitates a misallocation of capital to less efficient and less competitive financial institutions, thereby creating an inefficient economy within the sector.
CUs have already increased their acquisitions of small and regional banks, supporting the ABA’s competition concerns. In 2019, CUs acquired sixteen banks, most of which were CBs with under $250 million in assets. This almost doubled the number of such acquisitions from 2018. Notably, 2019 featured two deals in which a CU purchased a bank with over $730 million in assets. While many of the acquired banks’ shareholders are pleased with the results of their sale, due to the premiums that CUs pay, the number of CBs is decreasing. CBs striving to stay in business now face a greater threat as they are forced to find ways to outsource work, decrease the number of employees, and seek other ways to lower operational costs in order to offer rates allowing competition with the expanded and tax-advantaged CUs. At a certain point, community banks will have maximized their efficiency and be forced to decrease profits below the threshold at which business judgement justifies their existence. The increase in acquisitions of CBs by CUs, along with the reduction of limitations on community CUs affirmed in American Bankers, demonstrates that the competitive pressure is real and pushing CBs closer to that threshold of sale, cease, or innovate away from providing community banking services.
B. The Tax Exemption Advantage
Since 1937, CUs have enjoyed a federal tax-exempt status on net profit. California also treats CUs as not-for-profit organizations exempt from state taxes on profits. It is estimated that the federal government missed out on about $2 billion in tax revenue due to this exemption in 2019 alone. Meanwhile, CBs face corporate tax rates or S corporation tax rates while competing to provide the same or substantially similar services. This discrepancy has created much debate as to whether the tax exemption advantage is justified, or CUs should be taxed like their competitors.
i. Structural Justification
One possible reason to burden banks is their for-profit status. By design, CUs are not-for-profit, member-owned entities. This results in a distinction regarding who benefits from profits. In a bank, profits that are not allocated to pay taxes are used to provide realized or unrealized returns for shareholders through dividends or reinvestment into the business for the sake of competition to improve future profits or stability. CUs, instead, utilize their profits to provide dividends for members, to facilitate reduced fees, increase asset size, lower loan interest rates, and increase savings interest rates. Part of the distinction evident from the difference in profit utilization is whether the beneficiary must utilize the services of the financial entity to realize a benefit and how great such benefits can be. In both cases, the owners benefit. CU members benefit from the profits through dividends to account holders, who must at least have a checking account with the entity, lower rate loans which are only available to members, and service fee reductions. Profit derived benefits in CUs are limited to these use-realized or use-related gains. Contrarily, the bank shareholders need not utilize any bank services in order to receive a dividend and may sell or buy shares to realize gains in value attributable to the bank’s greater profitability, growth, and performance.
This structural distinction is built upon the underlying purpose of CUs. CUs were originally created “to make more available to people of small means credit for provident purposes . . . to [help] stabilize the credit structure of the United States.” CUs are limited to and required to serve a base that holds some form of common bond. Advocates against sustaining the tax exemption target this purpose by claiming that the continually weakened common bond requirement, taken into consideration with the consumers that CUs actually serve, has shifted the services and membership of modern-day CUs far from the original purpose which justified the exemption. This argument was recently bolstered by a study finding that CU members are predominantly from middle and upper-income households, detracting from providing services to “people of small means,” and even make predatory and risky loans, veering from the “provident purposes” root.
ii. Large Banks Can Compete, Small Banks Cannot
Larger banking institutions possess a convenience advantage with their widespread branch and ATM locations, ability to invest in the newest banking technology to lead in user-experience, and other competitive advantages deriving from their size and established presence. Thus, the CU tax exemption does not unfairly compete with banks. While CUs have yet to approach the size of national and international banks, most banks in the United States and California are CBs. The largest banks may have national reach and the capital to innovate and provide strong competition against CUs; however, about 60 percent of banks have less than $500 million in assets and are financially limited in expansion as well as the ability to provide competing rates. In comparison, the average CU has $339 million in assets. Thus, larger institutions may be able to compete with the lesser asset holding CUs by being more dynamic. Though, the average bank does not have that capability and cannot compete as well with CUs as they lack the profits necessary to fund a national reach and innovative technology. Additionally, smaller banks and CUs provide the same or substantially similar services and technology to their customers. Therefore, there is pressure on CBs to save through operational efficiency and specialization.
iii. Economic Efficiency
Tax proponents argue that the CU tax exemption violates the neutrality and efficiency principles of sound tax policy. That is, under the current CU exemption, similar or the same economic activities are taxed for some financial institutions but not for others. One claim is that this lack of neutrality allows CUs to grow at the expense of the banking industry by way of misallocating capital, resulting in CUs becoming larger and less efficient than banks on a macroeconomic level. In essence, the allowance for internal inefficiency provided by the tax exemption, by creating an edge over the tax paying competition, attracts capital to the non-utility maximizing producer. Thus, rates are not as low as they would be with neutral taxation and market competition from banks driving internal efficiency in CUs.
An interesting aspect of applying the CUs exemption to this concept is that CUs typically provide lower costs of financial services and higher depository rates than banks. This brings into question whether the exemption, which benefits consumers, should be addressed. Here, a subsidization argument arises to ask, “at what cost?” In this scenario, the government loses out on up to 21% of the CU’s profits that would be paid in tax in return of whatever benefits CU members receive. In 2018, CU members received benefits equivalent to $103 each, or over $11.7 billion in direct financial benefits total. Considering the CU cumulative 2018 net income of roughly $13 billion, it is clear that the overall tax rate on CUs would have to far exceed 50 percent for any increase in government tax revenues to reach a similar amount as the benefits received by members.
Some estimate that removing the tax exemption would actually decrease tax revenues and national GDP by billions of dollars. The basis for this argument is that on top of the lower costs of capital and services that CUs provide to consumers, the increased competition they create in the financial services market actually forces banks to become more efficient to offer the competitive rates necessary for survival, and thus the resulting lower costs of financial services benefit consumers regardless of their decision to use banks or CUs.
While making CBs more efficient and potential overall market benefits may alleviate some misallocation fears, the CU inefficiency allegation does not fall flat because profit can be deteriorated by inefficiency. For instance, a CU can have greater profits than a similarly sized bank while having lower revenue and higher net operating expenses than the bank. In fact, studies have estimated that at least half of the profit inefficiency gap of 65 annual basis points between banks and CUs is attributable to non-government mandated inefficiencies. That is, half of the difference is potentially a result of wasteful CU operations or mismanagement. CU profits could actually be greater by an estimated 32 annual basis points by increasing competition to address their inefficiencies. Therefore, as long as the inefficiencies in comparison to their financial services competitors exist, CUs offering the same or less benefits than banks will cause a misallocation of capital.
V. A Diamond in the Rough
American Bankers affirmed the NCUA’s expansive rule change that weakened the local community’s limitations and rural district qualifications for CCU member fields. Through this administrative change, the NCUA increased the threat credit unions pose for CBs. Increased competition from banks will force CUs to look toward improving their efficiency and decreasing the advantage that CBs previously relied on to compete in terms of rates and fees. Already faced with substantial competition from state-chartered CUs in California, this escalated pressure from CCUs may prove disastrous for CBs’ survival. Interestingly, the purpose of CUs is not in conflict with banks, in fact, it is partially fulfilled by them. CUs were created to make credit more available to people of small means. Today, banks play an increasingly important role in providing financial services and access to the Act’s target constituency. Moreover, banks are already operating with greater efficiency than CUs as a result of the continued weakening of CU member field limitations and the CU tax exemption. Thus, banks lacking substantial resource advantages should not be neglected as they provide opportunities to further the objective of CUs while generating additional tax revenue through their non-member-owned structure.
Instead of pushing CBs towards impracticality until they are replaced by CUs, a service focused tax reduction or exemption should be enacted on bank profits generated from services that are substantially similar and in direct competition with those offered by CUs or CCUs. For example, profits that CBs generate from auto-loans, in a locality in which a CCU also offers auto-loans, would not be taxable income. This solution would further accessibility to capital for people of small means, solve the resource misallocation issue, reduces the cost of capital and financial services overall, and preserve CBs by creating free-market competition. Accessibility would increase because community banks serving people of small means would not dissipate due to pressure from CUs, creating sustained stability for financial institutions. CUs also would not lose their tax-exempt status, allowing them to continue serving their bases without increased costs that may reduce accessibility for low-income customers. Furthermore, this would place CUs and CBs into tax-neutral competition, creating lower rates and service fees that are lower than those provided by CUs today and reflect efficiency in reducing operating costs rather than a government prescribed advantage.
In short, the expansion of CUs has created a unique opportunity for the government to utilize efficient banks as a catalyst to reach new levels of CU purpose fulfillment and success. Capitalizing on this opportunity by enacting service-based tax neutrality legislation for CBs can create a competitive market that maximizes efficiency, which would result in even greater access and monetary related benefits for financial services consumers.
 Nat’l Credit Union Admin., Industry at a Glance: Second Quarter 2020 (2020); Credit Union Nat’l Ass’n, Frequently Requested Credit Union and Bank Comparisons (2019) (comparing credit union’s average asset growth rate in 2019 of 7.7% with the 4.6% average growth rate for banks).
 See Chartering and Field Membership Manual, 81 Fed. Reg. 88,412, 88,440 (Dec. 7, 2016) (to be codified 12 C.F.R. pt. 701).
 Am. Bankers Ass’n v. NCUA, 306 F.Supp. 3d 44, 48 (D.D.C. 2018).
 See 78 Cong. Rec. 12,223-25 (1934).
 Federal Credit Union Act, Pub. L. No. 73-467, § 1, 48 Stat. 1216 (1934).
 See Kelly Culp, Banks v. Credit Unions: The Turf Struggle for Consumers, Bus. Law. Vol. 53 193, 194 (1997).
 U.S. Dep’t of Treasury, Comparing Credit Unions with Other Institutions 2 (Jan. 2001).
 NCUA, What is a Credit Union?, MyCreditUnion.gov, https://www.mycreditunion.gov/about-credit-unions/credit-union-different-than-a-bank-text-only (last visited Nov. 14, 2020).
 Pub. L. No. 91-468, 84 Stat. 994 (1970).
 Pub. L. No. 73-467, 48 Stat. 1219 (1934); NCUA v. First Nat’l Bank & Tr. Co., 522 U.S. 479, 482-83 (1998) (quoting 12 U.S.C. § 1759).
 Id. at482-83.
 Id. at 500-03.
 12 U.S.C.S. § 1759 (b)(2)-(3) (1998) (emphasis added).
 Pub. L. No. 73–467, § 109, 48 Stat. 1216 (1934).
 12 U.S.C. § 1759(b)(3), (g)(1) (2006).
 306 F. Supp. 3d at 52 (citing 63 Fed. Reg. 72,037 (Dec. 30, 1998)).
 75 Fed. Reg. 36,257, 36,258, 36,264 (June 25, 2010); 78 Fed. Reg. 13,460, 13,463 (Feb. 28, 2013). Core-Based Statistical Areas are Office of Management and Budget designated regions around the country which comprise of at least one urban cluster, or core, with 10,000 or more people and adjacent counties with substantial commuting ties to that core.
 75 Fed. Reg. 36,264 (June 25, 2010); 306 F. Supp. 3d at 53.
 See 306 F. Supp. 3d at 53-54.
 Compare Id. at 53 (citing 81 Fed. Reg. at 88,440), with 78 Fed. Reg. 13,460, 13,463 (Feb. 28, 2013) (requiring a portion of the core-based statistical area include the core to be considered part of a local community).
 306 F. Supp. 3d at 53 (citing 81 Fed. Reg. at 88,440). Combined Statistical Areas did not automatically satisfy the local community requirement under any prior NCUA rule. Combined Statistical Areas are conglomerates of two or more adjoining Core-Based Statistical Areas, each of which has substantial commuting ties with at least one other Core Based Statistical Area in the group.
 306 F. Supp. 3d at 53-54 (citing 81 Fed. Reg. at 88,440).
 See 934 F.3d at 659 (2019).
 The Chevron doctrine is a two-prong test for determining whether an agency “has stayed within the bounds of its statutory authority” when issuing its action. See 934 F.3d at 662 (2019) (referring to Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 866 (1984)). The first prong requires the court to determine whether Congress has directly spoken on the issue at hand and gave effect to any unambiguously expressed intent. If no unambiguous Congressional intent is found, the court proceeds to the second prong and determines whether the agency’s action is based on a permissible construction of the statute. See 934 F.3d at 656 (2019).
 934 F.3d at 664, 671-72.
 Id. at 673-74. The NCUA failed to provide satisfactory reasoning for removing the core requirement. Thus, the court held that the core elimination was arbitrary and capricious but opted to remand without vacatur based on a conclusion that vacating the rule may temporarily deprive some poor and minority suburban residents from receiving adequate financial services.
 Am. Bankers Ass’n v. NCUA, 207 L.Ed.2d 1097 (U.S. 2020).
 See California Credit Unions, Nat’l Credit Union Serv. Org.,http://ncuso.org/ca (last visited Nov. 14, 2020); See also Profile of Credit Unions, Cal. Dep’t of Fin. Prot. & Innovation, https://dfpi.ca.gov/wp-content/uploads/sites/337/2020/02/CU-profile-4q-19.pdf (last visited Nov. 14, 2020).
 Credit Unions, Cal. Dep’t of Fin. Prot. & Innovation, https://dfpi.ca.gov/credit-unions (last visited Nov. 14, 2020).
 State vs. Federally Chartered Credit Unions: What’s the Difference?, Investopedia (Feb. 22, 2020), https://www.investopedia.com/ask/answers/100314/what-difference-between-state-and-federally-chartered-credit-union.asp.
 Cal. Code Regs. tit. 10, §§ 30.50, 30.51 (2020).
 See Join Us, Golden 1 Credit Union, https://www.golden1.com/join-us (last visited Nov. 14, 2020) (describing membership requirements and claiming over 1 million members).
 Community Banking Study, Fed. Deposit Ins. Corp. (Dec. 2012), https://www.fdic.gov/regulations/resources/cbi/report/cbsi-1.pdf.
 Community Banks: Number by State and Asset Size, Banking Strategist, https://www.bankingstrategist.com/community-banks-number-by-state-and-asset-size (last visited Nov. 14, 2020) (explaining that community banks make up 97% of all banks in the United States).
 Reducing the number of banks providing financial services by replacing them with credit unions reduces the tax revenue from such services because credit unions do not pay tax on profits.
 Paul Davis, 6 Takeaways from Bank M&A in 2019, American Banker (Jan. 5, 2019, 9:00 PM), https://www.americanbanker.com/list/6-takeaways-from-bank-m-a-in-2019.
 See Andrew P. Meyer, Why Are More Credit Unions Buying Community Banks?, Fed. Reserve Bank of St. Louis (Apr. 11, 2019), https://www.stlouisfed.org/publications/regional-economist/first-quarter-2019/credit-unions-buying-community-banks; see also David Hayes & Carolyn Duren, Community Banks Feel the Pressure as Credit Unions Grow, S & P Global (Aug. 26, 2019), https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/community-banks-feel-the-pressure-as-credit-unions-grow-53425603.
 Not-for-profit organizations can earn profits, but not for their members. “All money earned through pursuing business activities or through donations goes right back into running the business.” Emily Heaslip, Nonprofit vs. Not-for-Profit vs. For-Profit: What’s the Difference?, U.S. Chamber of Com. (Mar. 30, 2020), https://www.uschamber.com/co/start/strategy/nonprofit-vs-not-for-profit-vs-for-profit. This is particularly interesting for credit unions, in which the members directly reap the benefits of the profits by utilizing services, while non-members cannot reach those benefits.
 Erica York, Repealing the Federal Tax Exemption for Credit Unions, Tax Found. (Oct. 16, 2019), https://taxfoundation.org/repealing-credit-union-exemption
 Federal Credit Union Act, Pub. L. No. 73-467, § 1, 48 Stat. 1216 (1934).
 See New Report Finds Credit Unions Operate with Scant Regard for Statutory Mission, Am. Bankers Assoc. Banking J. (June 25, 2019), https://bankingjournal.aba.com/2019/06/new-report-finds-credit-unions-operate-with-scant-regard-for-statutory-mission.
 Dan Caplinger Should Credit Unions Pay Taxes?, The Motley Fool (Sep. 12, 2013, 5:25 AM), https://www.nasdaq.com/articles/should-credit-unions-pay-taxes-2013-09-12.
 Banking Strategist, supra note 38.
 Nat’l Credit Union Admin., Industry at a Glance: Second Quarter 2020 (2020).
 York, supra note 44.
 Id.; Diego Restuccia & Richard Rogerson, The Causes and Costs of Misallocation, 31 J. Econ. Persp. 151 (2017) (explaining how non-neutral tax policy causes a misallocation of resources and decreases overall efficiency). CU’s face some inefficiency in operational processes due to statutory or administrative law mandates. Thus, misallocation will persist as long as the tax exemption stands because the mandated inefficiencies are economic waste and cannot be pushed out by free market competition due to the inefficient practice’s tax savings which translate into better rates.
 The federal corporate tax rate in 2020 is 21%.
 If benefits are over $11.7 billion, and net income for CUs is $13 billion, you would have to tax the $13 billion in net income at roughly 90% to achieve a similar benefit amount monetarily.
 Robert M. Fienberg & Douglas Meade, Economic Benefits of the Credit Union Tax Exemption to Consumers, Businesses, and the U.S. Economy, Nat’l Assoc. of Federally-Insured Credit Unions (Jan. 2017), https://www.nafcu.org/sites/default/files/uploads/Data%20&%20Tools/Tax%20Study/2017%20NAFCU%20Tax%20Exemption%20Study%20Full%20Report.pdf (estimating that removing the tax-exempt status of credit unions would decrease federal tax revenue by $38 billion and reduce GDP by $142 billion between 2017 and 2027).
 Id. at 4.
 Robert DeYoung et al., Who Consumes the Credit Union Subsidy?, Queens Mgmt. School 32 (2019).
 Richard G. Anderson & Yang Liu, Banks and Credit Unions: Competition Not Going Away, Regional Economist (Apr. 1, 2013), https://www.stlouisfed.org/publications/regional-economist/april-2013/banks-and-credit-unions–competition-not-going-away (stating that banks serve more low-income customers than credit unions).