Credit Unions want to be excluded from new protections for military members borrowing money.
Earlier this year, the Department of Defense proposed expanding the Military Lending Act (MLA) to cover more types of credit. The MLA caps annual interest rates for service members at 36 percent on certain consumer credit products.
{mosads}In a letter to the DOD, the National Association of Federal Credit Unions (NAFCU) and four other credit union trade associations said credit union are not the perpetrator and should be excluded from the proposal to amend the rules on Limitations on Terms of Consumer Credit Extended to Service Members and Dependents, which implements the MLA.
“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,” said the letter, which was signed by the African-American Credit Union Coalition, the Credit Union National Association, the Defense Credit Union Council and the National Association of State Credit Union Supervisors, in addition to the NAFCU.
“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 groups said the DOD should work with the National Credit Union Administration to ensure credit unions can continue to offer service members payday loans.
The DOD is expected to issue a final rule in May.