September 13, 2017

Lawmakers urge DoD to exempt CUs from MLA changes

Rep. Paul Cook, R-Calif., along with several fellow representatives, sent a letter Wednesday to the Department of Defense urging the department to exempt credit unions from the July 2015 amendments to the Military Lending Act.

"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 states. "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."

The letter acknowledges that while the MLA changes "have proven effective in broadening the scope of products and services targeted by … lenders, it has also had the unintended effect of creating barriers for good actors seeking to serve the military with highly regulated and safe products and services. Particularly, I am concerned about the unintended consequences on the thousands of credit unions, serving 110 million consumers including servicemembers."

"The letter is spot on — credit unions have suffered from increasingly burdensome regulation in the past decade," NAFCU President and CEO Dan Berger said. "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."

If the DoD will not exempt credit unions from the regulation, then the letter urges 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 asks for DoD to delay its effective date since they have 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 states.

Along with Cook, the letter was signed by Reps. Marcy Kaptur, D-Ohio, Tim Ryan, D-Ohio, Thomas Garrett, R-Va., Tom O'Halleran, D-Ariz., and Jackie Speier, D-Calif.

Last month, the DoD informed NAFCU that it would not delay the credit card compliance under the MLA rule. NAFCU has met with representatives from the DoD numerous times on credit-union-specific issues and concerns about MLA compliance. The association also sent a letter in May with recommended guidance text and signed onto a letter in June with a coalition of trade associations urging an extension of the credit card compliance date.

The association will continue to push for more clarity in the form of guidance or revisions to the regulatory text for the industry. NAFCU has a host of MLA resources available here.