August 23, 2022

DoD banking study reveals servicemembers have ample financial services options


The Department of Defense (DoD), under the Office of the Under Secretary of Defense, has issued its Access to Financial Institutions on Military Installations report to the leaders of the Senate and House Armed Services Committee. The study, which details information on financial institutions serving military installations and examines the DoD’s policies to ensure access to financial services for the military community, was requested in the House report accompanying the FY 2022 National Defense Authorization Act (NDAA) passed late last year. 

The study was precipitated by banker claims that military banks are leaving bases due to increased lease costs and that is hurting access to financial services for those in the military.  Banks have lobbied for no-cost leases for banks to be included in the NDAA for the last several years.

However, In response to that concern, the DoD report underscored the consistent availability of financial institutions, including banks and credit unions, on military installations and highlighted that “military personnel and civilians increasingly have the option of obtaining banking services online and/or off-base” and that they are fully able to “engage in a wide range of financial services transactions with any number of financial services providers they choose at almost any time, regardless of where either party may be physically located.”

The report also noted how the DoD calculates the “in-kind” of services financial institutions provide on military installations, and whether that value can be used to “fully satisfy the fair market value requirement for leasing non-excess property” on military installations.

NAFCU has long supported the protection of credit union nominal leases on military installations and the opposition of efforts to allow all banks to operate rent-free on military bases, under the NDAA. Banks have argued for “parity” on this issue but have failed to recognize the substantial difference between not-for-profit defense credit unions and for-profit banks, as well as credit unions’ non-cooperative, member-focused structure.

Banks have also argued that banks leaving military installations restricts access to financial services, which according to the report, is a misleading claim. Credit unions have also maintained that the banks can and should use the existing process for obtaining in-kind consideration, a negotiation between the banks and the military installation, which was reaffirmed in the report.

Unlike banks, credit unions are not focused on obtaining profit. Instead, they are centered around how to offer safe, affordable, and accessible financial products and services to their members. 

NAFCU will remain engaged with Congress, as the Senate takes up its version of the NDAA in September. The The House passed its version of the NDAA last month. Both chambers will need to reconcile the two version of the bill to finalize a FY 2023 NDAA.