The two largest credit union trade associations on Wednesday released statements in support of a letter written by lawmakers to the Department of Defense asking the DoD to exempt credit unions from July 2015 amendments to the Military Lending Act.
The letter was written by Rep. Paul Cook (R-Calif.), along with fellow representatives Reps. Marcy Kaptur (D-Ohio), Tim Ryan (D-Ohio), Thomas Garrett (R-Va.), Tom O'Halleran (D-Ariz.), and Jackie Speier (D-Calif.).
Cook, who served 26 years in the United States Marine Corps and retired as a colonel in 1992 before running for public office, wrote in the letter he “strongly supports” the objective of the MLA and the July 2015 amendments, but he expressed concern that the new regulations are having “unintended consequences” of limiting the availability of certain products and services.
“It has come to my attention that the July 2015 amendments have caused numerous financial institutions to eliminate products and services, many of which have been relied on by servicemembers and their families," the letter stated. “Of great concern, I have heard from credit unions that they are being forced to cut back on, or eliminate, products that help find solutions for credit for servicemembers and their families that may have few, or much worse, other options.”
Dan Berger, president and CEO of the National Association of Federally-Insured Credit Unions, released a statement saying, “The letter is spot on – credit unions have suffered from increasingly burdensome regulation in the past decade. NAFCU and its members sincerely appreciate Rep. Cook's efforts to organize support for credit union exemption from these MLA amendments. Our members need relief in order to provide services to our country's military community who deserve every opportunity to live their American Dream.”
The Credit Union National Association and the Defense Credit Union Council held a meeting with the Department of Defense regarding MLA on Wednesday. Jared Ihrig, CUNA’s chief compliance officer, said the trade group has been seeking guidance from the DoD on these MLA changes for many months now.
“Credit unions deserve unambiguous guidance on how they can continue service to servicemembers and their families without running afoul of the MLA,” Ihrig said. “The DoD recognized our concerns about implementation of the credit card provisions, and said they would listen to credit unions and other industry concerns about difficulties they experience in implementing the regulation over the coming months, but advised that the forthcoming guidance will not touch upon the credit card provisions set to go into effect on Oct. 3; rather such guidance will address clarifications and ambiguities of regulatory provisions that became effective in October 2016.”
Ihrig said DoD officials also indicated they have been consulting with other federal banking regulators, including NCUA and the Consumer Financial Protection Bureau, in developing additional guidance, and hope to meet with federal banking regulators near the end of October to further assess efforts of the regulatory implementation process by affected creditors and financial institutions.
Credit card rule delay?
If the DoD will not exempt credit unions from the regulation, the letter asks that rule be reexamined to see if it can be revised to minimize, “the unnecessary impact it is having on credit unions and other regulated financial institutions.”
Addressing the credit card component of the rule, which goes into effect Oct. 3, the letter asked the DoD to delay its effective date since the department has failed to issue interpretive guidance. “This will allow credit unions and others to continue to serve the military members and other consumers, without facing forced interruptions in service,” the letter stated.
Last month, the DoD said it would not delay the credit card compliance under the MLA rule.