Protesters Richard Hanzel, left, Brendan Hutt, and Richard Shavzin, right, of the Screen Actors Guild, dressed as wall street bankers, march from Goldman Sachs’ office to a rally in Federal Plaza demanding Wall Street reform, Wednesday, April 28, 2010, in Chicago.  (AP Photo)

Fed up with banks? You’re hardly alone. Credit unions have grown dramatically in the last 20 years, fueled largely by high fees charged by commercial banks.

A recent survey by Bankrate.com found that 72 percent of all credit unions still offer free checking, something almost unheard of at commercial banks. “Free checking remains well within reach of most Americans, and often means looking no further than their credit union,” said Greg McBride, Bankrate.com’s chief financial analyst.

Stories like this are fueling explosive growth in credit unions and grabbing the attention of more than just consumers. Commercial bankers and regulators are watching very carefully, too.

Credit unions are nonprofit coops that essentially function the same as a bank, but rely on members’ equity as their sole source of capital. Depositors are “members” in that they own one share in the credit union as an equal partner of all other depositors.

They exist in nearly every country around the world, though under different names, but in all cases, they are required to have some kind of bond between members. Many were founded by unions and other employee groups to pool resources. In the U.S., this was loosened up in 1998 to include residents of a geographical area. They are nonprofits and do not pay taxes, returning profits to their members in annual profit sharing.

Since 1994, their growth in the U.S. has been astonishing. Membership shot up up 44 percent to 99 million and assets topped $1 trillion for the first time in 2012, marking a growth rate of 6.2 percent annually, though still far behind the $13 trillion in assets held by commercial banks. They now issue over 17 percent of credit cards. The total value of mortgages underwritten by credit unions over the last 20 years has expanded 66 percent faster than those at commercial banks.

Growth hasn’t been seen across the board, however. During the same period, the number of credit unions has been cut in half, down to just under 7,000 nationally. Consolidation has come to define credit unions for some very important reasons.

While there are tremendous advantages to a credit union, they are especially vulnerable to economic downturns. Since they serve a well-defined population, their membership is by definition not diverse – a contraction in the company or area they serve hits them hard. Without outside capital, a terrible pinch always results. The downturn in 2007 and 2008 was especially hard on credit unions and has fueled the recent consolidation – and aggressive bids for new members.

Still, the spectacular growth has gotten the attention of the American Bankers Association (ABA). A small war has broken out with the ABA asking congress to consider taxing them. The Credit Union National Association (CUNA) has responded with its own plea for members to lobby Congress and keep the nonprofit status in place. On Feb. 26, they held a large rally in Washington that appears to have been successful in not only preserving credit unions’ tax-exempt status, but also keeping new regulations for commercial banks separate from credit union regulation.

“We find it disgraceful that while a new tax is being proposed for banks, today’s proposal ignores a $1 trillion credit union industry that pays no taxes at all, costing the U.S. Treasury $2 billion annually,” Frank Keating, president and chief executive of the ABA, said in a statement. “It’s time for this indefensible tax-exempt status to come to an end.”

The ABA is not the only organization that is watching the growth. Credit unions are regulated by the National Credit Union Administration (NCUA), which acts as both the insurance and regulator arm of the federal government. They only have $11 billion on hand to insure deposits and bail out credit unions that fail, which is a paltry sum given that there are now four credit unions with more than $10 billion in assets – the largest being the Navy Federal Credit Union, founded to serve Navy personnel and Marines, which now has $54 billion in assets. The largest bank in Oregon is now OnPoint, a credit union with $3 billion in assets.

The mergers are being watched very carefully by regulators, which have proposed new regulations to limit the risk assumed by credit unions. “They will force institutions to make risk-management choices that ensure compliance with the risk-based capital ratio rather than manage the actual risk of the assets,” said Dan Berger, president of the National Association of Federal Credit Unions. “This could have a chilling effect on many historically sound, well-managed credit union activities.”

The new rules have been issued for a 90-day comment period that expires in May, and the CUNA is already asking for an extension. “The risk based capital proposal is the most significant proposed rulemaking that credit unions will face this year and likely for years to come,” they said in a letter to the NCUA Board on Feb. 28.

Despite the pressure, CUNA is charging ahead and doing what it can to expand credit unions even further. In a venture new to all credit unions, some are issuing student loans. This is the kind of activity that the NCUA is most concerned about. “It’s got some unique qualities and risks that other loans don’t have,” said JeanMarie Komyathy, director of risk management for the NCUA. “It’s an unsecured loan to somebody who doesn’t have a job.”

The industry is not backing down as it continues to find avenues for expansion. H.R. 2572, a bill introduced in Congress in 2013 by Rep. Gary Miller (R-CA), would allow credit unions to issue subordinate debt bonds. This would inject more capital into the system through conventional means without the holders of those bonds being voting members of the credit union. Access to that capital would make credit unions full players in the credit and loan markets like any regular bank.

The growth in credit unions should continue at least as long as high fees define commercial banks. Given how flexible and personal they are, credit unions do offer a tremendous advantage for ordinary consumers. Their small size carries risk, however, and working around that has made for aggressive growth and consolidation.

Could credit unions replace commercial banks? It seems unlikely, but they are a very popular alternative – and are growing much more rapidly.