WASHINGTON—CUNA, NAFCU, and the Defense Credit Union Council have sent a letter to House and Senate Armed Services Committee leaders in advance of consideration of the FY24 National Defense Authorization Act (NDAA).
The joint letter rejects what the trade groups called the "unnecessary expansion" of the lease agreement between the Department of Defense (Dod) and credit unions to include banks. The issue--banks have sought to be eligible for certain waivers for on-base branches in recent years--has become an annual one for credit unions, which to date have defeated such provisions.
“We anticipate for-profit banks to ask Congress for a handout by seeking a provision in the 2024 NDAA that would require DoD to treat them the same as credit unions when it comes to leases. This may include inserting a provision that would force DoD to provide the same nominal leases to all banks,” the letter reads. “The bottom line is that for-profit banks have declined to use the process available to them at the DoD to lower base lease. Furthermore, we are concerned that this effort by for-profit banks would amount to Congressional micromanagement of individual base commanders to solve a problem that the DoD has confirmed does not exist. We oppose them using this critical, must-pass defense bill to cut corners.”
The letter further notes the Department of Defense (DoD) studied the issue in 2022 in a report analyzing financial access for servicemembers on base. The report found servicemembers on base had many options—and no obstacles—when it came to obtaining financial services on any domestic military installations. It also notes banks are currently eligible for similar waivers, but have not pursued that option.
NAFCU Sends Letter to CFPB
Separately, NAFCU has sent a letter to the CFPB outlining ways the trade group believes it can strengthen the consumer credit card market.
Those suggestions include strategies for including more regulatory clarity related to disclosures and fewer rules that jeopardize credit unions’ ability to offer affordable credit card products to underserved communities and special populations.
In the letter, Regulatory Affairs Counsel James Akin cited the cost of disclosures as one of several obstacles credit unions face when entering or competing in the credit card market.
As a means of improving the card market and Regulation Z disclosure requirements, NAFCU is calling for:
- Increased flexibility to obtain consumer consent for electronic disclosures
- Clarification that the written application requirement for young consumers in the regulation can be satisfied by providing information orally during a telephone call
- Amending the timing requirements for disclosures to allow written disclosures to be delivered or mailed “as soon as reasonably practical” after a telephone call
‘Proven Track Record’
In addition, Akin said credit unions have a “proven track record of offering affordable credit card products to underserved communities and special populations.”
“The Bureau has recognized, time and again, that credit unions hold a unique, and invaluable, place within the consumer financial services market for underserved or rural communities, and low-income consumers,” he wrote. “To ensure the financial stability of these groups and facilitate much-needed access to credit the CFPB should focus on granting flexibility in credit card disclosures and fostering an environment that encourages innovation.
“Furthermore, the Bureau must avoid implementing initiatives such as the reduction in safe harbor fee amounts for credit card late fees, as this could negatively affect communities by tightening credit and increasing industry consolidation while resulting in more expensive products and services to account for the lost revenue,” Akin continued.
Other Insights
NAFCU also provided additional insights into how the late fees proposal will negatively impact credit unions and the consumers they serve.
The letter was sent in response to the bureau’s request for information (RFI) to inform its biennial report on the state of the consumer credit card market.
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