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The Credit Union Freakout That Explains Everything

The Credit Union Freakout That Explains Everything

You may have been surprised in recent weeks to see your batty rightwing aunt embrace a new theme. A social media feed normally packed with anti-immigrant rants and “true crime” stories about hooded blacks is suddenly lit up with concern over the dull details of bank accounting. Apparently, the next step in Joe Bolshevik’s plan for American Communism isn’t migrant caravans or vaccine mandates, but a change in credit unions’ minimum threshold for reporting aggregate inflows and outflows.

Why is every Republibot you know railing about credit union rules? Certain people are desperate to kill the most important initiative of the Biden Administration to date, an initiative you’ve probably never heard of. Chances are they’ve already succeeded. How wealthy tax cheats and money launderers convinced your Aunt Trudy to race to their aid is the story of how democracy is dying in the US.

Here’s what’s happening out in the real world. Back in May, the IRS published a 107 page proposal which included efforts to battle money laundering and tax evasion. Their goal was to begin closing a gap in tax collection estimated at $1 trillion a year. That gap has more than doubled in just a few years, due in large part to a concerted campaign by Republicans since 2010 to wreck the IRS. Merely reducing the tax gap to where it was before the Tea Party came to Congress would be enough to fund Biden’s ambitious infrastructure bill entirely.

Every aspect of this IRS plan, and the wider infrastructure bill in which it’s bundled, is a crowd pleaser on its own. Raising taxes on the wealthy, cracking down on wealthy tax cheats and even supporting the growth of renewable infrastructure are all popular with voters across party lines. Mobilizing voters to protect money launderers sounds like a tough sell, but wealthy people have a lot of tools. Most importantly, they’ve learned how to weaponize the fear, alienation and racial grievances of people like Aunt Trudy.

Chances are, you hadn’t heard of the Biden Administration’s plan to crack down on financial crime until your rightwing friends started railing about it. They told you that Biden wants to force your credit union to turn over details of every transaction you engage in over $600. This would seem like overreach. It would also be a lie. So what’s really happening here?

Some clever strategist pouring over this policy package eventually hit on an idea. Page 88 describes a proposal that would dent money laundering by requiring banks to report an aggregate delta between between inflows and outflows in almost all accounts. It’s just two additional lines of data in the bank’s annual reports to the IRS, but it would immediately flag a common money laundering scam in which shell companies report transactions that didn’t really happen. Though the accounting details can be difficult to explain, it’s one of the simplest money laundering techniques in the arsenal. It usually involves a “small” business, often a restaurant. Phony accounts of revenues, expenses, and sometimes fake loans among multiple shell businesses obscure unexplainable accumulations of cash. These shell games have been a staple of businesses in the Trump family orbit. Reporting distortions in accumulated cash would be devastating to this money laundering model, immediately flagging these scams for audit.

Part of this plan would lower the threshold for reporting aggregate inflow/outflow data to accounts holding more than $600. Someone crafted a message meant to imply that the IRS would now be prowling through bank records of everyone even if they had as little as $600, but that’s still not the truly brilliant bit.

They delivered this pitch through a network of credit unions, crafting a message to imply that this bill was specifically targeting credit union customers. Credit unions are the Dollar General of banking. Credit union leaders are big fish in some very small ponds. A claim that Biden is fighting tax evasion by going after credit union depositors makes the whole effort sound silly. It also plays to the terrors of less sophisticated whites who also have a little money, a hard core Trumpian base. Plus, if you’re looking for people in the finance industry inclined toward Republicans and lacking the savvy to recognize disinformation when they see it, you couldn’t ask for better targets than small town, small-time bankers.

Across small-town America, credit union leaders jumped into a campaign to activate their customers. Starting in September, many credit unions sent an ominous warning to their customers.

At this stage, the message was only misleading in its framing – implying that the IRS proposal was directed at credit unions and it would threaten their privacy. In fact, nowhere in the 100+ pages of the plan does the term “credit union” ever appear. Also carefully excluded is any context around the proposal, or any resource allowing customers to locate and evaluate the actual IRS source material.

Still keeping mostly to facts, Fox would weigh in, making sure their viewers understood what they were supposed to fear with carefully placed lines like this, “Treasury Department officials have said that fears of increased audits on middle-class Americans are unfounded.” Wink, wink, they’re coming for you.

From here, the rightwing disinformation engine kicked in. Hannity would not be as careful about the facts as Fox’s news channels.

Fake news sites like Newsbusters began began spreading outright lies about the details of the provision.

Key to this next stage of the campaign is the lie that credit unions would be forced to report specific transactions to the IRS. White terror would be spread into receptive channels by fake social media accounts.

Then came the pastors, Republicans’ most reliable purveyors of fake news and white terror.

The passive-aggressive pastor-speak of the “if you’re fine with this” line is just the chef’s kiss of the whole campaign. It starts with wealthy tax cheats trying to figure out how to keep their money laundering channels intact. It ends with your local pastor, the guy who stood by Nana’s death-bed and baptized your children, lying to you to protect wealthy criminals.

One more little detail deserves mention in story of political hijacking. Reuters broke the news a few weeks ago that Trump’s favorite fake news network, OAN, was launched and funded by AT&T. Fake news sites like Newsbusters may be popular with your racist friends, but it doesn’t make any money. It only exists thanks to networks of wealthy people who bankroll it. Fox News gets a lot of attention for its audience size, but that audience doesn’t pay the bills. As you may have noticed if you ever watch the network, the quality of ads on the channel is consistently poor. Fox survives because it gets an extremely generous cut of cable carriage fees, far out of line with the network’s actual reach. Those carriage fees are negotiated with cable providers, like AT&T. People who have the most to lose from public accountability have invested spectacular resources in the disinformation machines that thwart public action.

Why are ordinary white people expending precious political capital to protect money launderers from paying taxes and facing prosecution? Money is distilled power. For ordinary people to protect their interests against those with money to burn they have to join together. What makes decent living conditions possible is the capacity of ordinary people to recognize their shared interests, building a shared mythology that pulls them together as an “us.”

Republicans are winning this fight because they channeled their pitch to protect wealthy criminals through channels white Americans trust. Trust and loyalty will defeat facts every day of the week and twice on Sunday. Facts won’t save us. Without a narrative that binds us together in a sense of solidarity we are just individuals, outgunned and outclassed in political fights by those with greater resources.

White supremacy played that unifying role for decades, binding Americans together in a shared sense of superiority over a hated Black “other.” Now it’s only able to mobilize the most marginal whites in the saddest, most self-defeating ways. Something has to take the place of white supremacy as a glue holding Americans together. We will keep losing fights over the most otherwise popular, common-sense efforts to create a decent way of life until we build a new unifying narrative.

Aunt Trudy, Pastor Nauman and AT&T will succeed in subverting democracy until ordinary Americans find something better than white supremacy to believe in.


  1. You can lay the blame on any number of reasons, but bottom line, Biden and the Dem’s have failed in any initiative they have tried to implement. And that is all that matters to the average voter who can’t remember last week, let alone 6 months ago.

    They took over from a fascist, but learned nothing on how to play hardball.

  2. I partially disagree about your broad brush strokes about Credit Unions. OTOH this sentiment:

    “… the Dollar General of banking. Credit union leaders are big fish in some very small ponds.”

    THAT can apply not only to some Credit Unions, but also to actual small banks that somehow have not managed to get swallowed up by bigger fish. The chair of the Republican Party where I grew up owned such a bank, and your analogy fits that bank’s management to a T.

    I *do* wonder how much monopolies (and even just plain large firms) have grown because enough local business owners thought of themselves as feudal lords more than community servants, and people preferred the nameless large corporation to the snotty local establishment? (There’s a joint sociology/economics study in there.)

    The class of people I talk about were feature in an Atlantic article recently:

  3. I heard about this yesterday from another guy I follow. Beau of the fifth column on Utube. I have 2 Credit Union Bank accounts. But do not keep much of my money there, just enough to pay my bills and a cushion for emergencies. Most of my assets are in brokerage accounts and watch closely by the IRS. That is pretty much were the vast majority of us are who have any wealth, except for the Uber wealthy.

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