August 1, 2013
Federal Docket Management
System Office
4800 Mark Center Drive
East Tower
Suite 02G09
Alexandria, VA 22350-3100
RE: Docket ID: DoD-2013-OS-0133; Limitations on the Terms of Consumer
Credit Extended to Service Members and Dependents
Dear Sir or Madam:
On behalf of the National Association of Federal Credit Unions (NAFCU), the only trade association that exclusively represents federal credit unions, I am writing to you regarding the U.S. Department of Defense (DoD) advance notice of proposed rulemaking on whether the DoD should revise its regulations regarding consumer credit protections afforded to members of the armed forces and their dependents. 78 FR 36134 (June 17, 2013).
NAFCU appreciates the opportunity to provide comments to the DoD on the important issue of protecting servicing members and their dependents from unscrupulous financial services practices. In addition to this comment letter, NAFCU is a signatory to a letter to the DoD, also submitted today, that addresses the issues raised by the ANPR in more detail. For reasons further discussed below and in that letter, we strongly urge the DoD to refrain from revising its 2007 final rule implementing the Military Lending Act.
Many credit unions are established for the specific purpose of providing dependable financial services to service members. Unlike other types of financial institutions, the men and women who serve in our nation’s armed forces are member-owners of their credit unions.This special affinity between service members and their credit union has led to unparalleled commitment and level of service. As member-owned-and-operated financial depository institutions, credit unions have long been—and will continue to be— in the front lines in the battle against unscrupulous lending practices, particularly those that exploit military personnel. The credit union industry is dedicated to helping its member-owners avoid predatory lenders by providing, among other things, low-cost loans and offering financial education to assist them in developing sound debt management skills.
As a result of their unique mission and structure, as well as their deep commitment to the members, credit unions are widely recognized as leaders in the fight to eradicate predatory lending and providing financial education to their members and their communities. In its 2006 Report on Predatory Lending Practices Directed at Members of the Armed Forces and Their Dependents, the DoD recognized that credit unions with military personnel and their families or bases within their fields of membership have demonstrated particular vigilance in their efforts to combat predatory lending.
NAFCU has, and will continue to work, with the DoD and the Consumer Financial Protection Bureau (CFPB) on issues affecting our nation’s service members. During and following the DoD’s report to Congress on products the DoD found especially troubling, as well as the agency’s implementation of the Military Lending Act in 2007, NAFCU and credit unions provided input and worked closely with the DoD in its efforts to address certain practices by regulation. Since that time, we have maintained a continuing dialogue with the DoD and the CFPB on these issues.
NAFCU strongly believes that the current regulations the DoD is considering to revise are working well and need not be revised. In this regard, we note the Consumer Federation of America agrees that the regulations have been effective in addressing many of the issues that DoD sought to address in its 2007 final rule.
Nonetheless, we would support efforts to reign in the practices of unregulated entities that conduct business on military bases and offer services to service members and their dependents. A key concern for credit unions that serve in these environments is the continued allure and availability of payday loans and other costly products that place many of our service members in difficult financial circumstances. Although credit unions offer alternatives, financial education and exert efforts to help their members make sound financial decisions, NAFCU would welcome DoD’s review and action that targets the activities of unregulated entities.
NAFCU appreciates the opportunity to provide comments on the proposed rule Should you have any questions or would like to discuss these issues further, please contact me or Tessema Tefferi, NAFCU’s Senior Regulatory Affairs Counsel, by telephone at (703) 842-2268 or by email at ttefferi@nafcu.org.
Sincerely,
B. Dan Berger
President and Chief Executive Officer