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Forty Democratic senators, in a letter yesterday to Defense Secretary Chuck Hagel, lodged their support for proposed Military Lending Act rule changes to further protect servicemembers against predatory practices. The proposal is out for comment until Dec. 26.

The senators noted the Defense Department's stated goal of closing existing MLA loopholes and said the current proposal appears to do that. "We believe this strikes a significantly better balance than the current MLA rule between protecting service members and their families on the one hand and maintaining access to non-predatory credit on the other," they wrote in a letter copied to the heads of all federal financial institution regulatory agencies, including NCUA and CFPB.

Currently, MLA protections extend to closed-end payday loans of up to $2,000 with terms of 91 days or fewer; closed-end auto title loans with a term of 181 days or fewer; and closed-end tax refund anticipation loans. DoD has proposed revising the rule's definition of "consumer credit" to more closely match the definition under the Truth in Lending Act – subjecting more credit products to a 36 percent loan rate cap – and to create a database that lenders would check to verify whether an applicant is covered by the rule.

Under the current proposal, the rule would not extend to residential mortgages, credit extended for secured personal property purchases or vehicle purchase loans secured by an interest in the vehicle.

"NAFCU supports DoD's focus on protecting servicemembers and their families from predatory credit practices," said Quincy Enoch, NAFCU's associate director of legislative affairs and military liaison. "We are working with DoD, member credit unions and others to ensure any final rule offers strong protections and ensures servicemembers the continued ability to benefit from the superior services offered by the nation's credit unions."

Enoch also noted appreciation for DoD's decision to give stakeholders additional to comment on the proposed rule. The deadline was originally set for Nov. 28, but DoD extended that following requests from NAFCU and others for more time.