After an 18-month search over 100 cities in all 50 states, PenFed has finally decided where it will establish its $48 million, 300,000 square feet regional financial center: San Antonio! Never mind that the second-largest credit union is literally named after a military landmark in Virginia – executives have decided that San Antonio is the best bet, especially considering that government officials there are offering PenFed $3.1 million in incentives. Yes, you read that right. A $25 billion institution that has already been given a free pass on paying federal income taxes is now being provided additional incentives from a state government.
Gov. Greg Abbott (R-TX) has promised more than $2.5 million from the Texas Enterprise Fund, which distributes cash grants and is called by many Texas’s “deal-closing” fund for swaying businesses to headquarter in the state. So, in effect, Texas taxpayers may get jobs, but they will also have the privilege of subsidizing PenFed not once, but twice — first through the credit union’s federal income tax exempt status, and then through state tax dollars. According to PenFed CEO and President James Schenck, other cities were “as competitive, if not more competitive…the economic incentives were very helpful when you’re trying to get down to the final five of where you want to locate. They make a difference.”
Are we still talking about a nonprofit credit union picking the location of its new headquarters… or a massive corporation like Amazon?
This is just the latest in a string of cases of mission creep by PenFed over the past few years, once again highlighting its pursuit of growth at “no speed limits” despite the costs to American taxpayers and members. Last year, PenFed announced its purchase of the award-winning marketing agency White64 and even more recently its acquisition of Progressive Credit Union, a New-York based credit union struggling to bounce back after risky taxi medallion loans, a deal that will allow PenFed to pursue nationwide membership thanks to Progressive’s grandfathered charter.
It’s the same story over and over again: large credit unions using their taxpayer-backed dollars to buy assets instead of supporting communities and members. Whether in the form of a new headquarters, an advertising agency or another credit union or small bank – the intent is always the same- more tax-exempt money to add to their balance sheets.
PenFed and other large credit unions continue to feather their own nests with zero consequences from their regulator, NCUA. They perpetually abuse a system that was created to help ensure they stick to their mission of supporting people of modest means, preying on that loophole and continuously stealing from taxpayers in the name of larger profits. It’s truly time for Congress to reevaluate why we are considering these entities nonprofits in the first place.