WASHINGTON—Five credit union trade associations have sent a comment letter to the Department of Defense on its proposal to amend the rules on Limitations on Terms of Consumer Credit Extended to Service Members and Dependents, which implement the Military Lending Act (MLA).
The letter, signed by the African-American Credit Union Coalition (AACUC), CUNA, Defense Credit Union Council (DCUC), NAFCU and NASCUS, says the “credit union system has significant concerns with the proposal. The increased costs and unintended consequences of the proposal, especially on smaller credit unions, could negatively impact the delivery of high quality reasonably priced financial products and services to our troops, their families, and their dependents. From our perspective as credit unions’ advocates, any changes to the current rules should curtail and eliminate the unscrupulous business practices of organizations targeting our military personnel—and not harm credit unions that are dedicated to the financial well-being of their member-owners.”
The credit union groups stated that the existing DoD rule on consumer credit for service members and their dependents has had the support of the group and has been “an effective tool in protecting military consumers and curbing many abusive practices involving those who serve in our Armed Forces. We appreciate the continued relationship with the Department and its support for credit unions’ efforts to meet our troops’ everyday financial needs in a most effective and beneficial manner.”
The credit union groups said they recognize that some lenders have skirted the rules and “evaded” the protections of MLA, but as credit unions are “not predatory lenders” they should be exempt from any modifications to DoD’s rule concerning limitations on terms of consumer credit extended to service members and their dependents.
“Most importantly, the financial services and products that are cited as the need for broader coverage of the MLA’s protections are generally not offered by credit unions and the lenders cited are not credit unions,” the group said, citing the additional compliance burden as another reason the DoD should exempt CUs.
NCUA earlier sent a similar letter to the DoD.
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