(December 23, 2014) -- Here is NAFCU President and CEO Dan Berger's comment letter regarding the recent Department of Defense (Department or DoD) proposed rule on Limitations on Terms of Consumer Credit Extended to Service Members and Dependents. NAFCU has significant concerns about the potential unintended consequences to credit unions based on the proposed changes in the rule.
In the letter, Berger writes, "NAFCU recommends that the Department exempt from the regulation all federally insured depository institutions. This would follow the intent of the legislation as well as provide servicemembers with greater protections from predatory lenders without adding the extraordinary compliance and regulatory burdens that accompany this proposed rule. An exemption would steer servicemembers and their dependents away from non-depository predatory lenders and into more mainstream consumer credit products."
Berger urges, "If the DoD decides not to exempt all depository institutions, NAFCU would request that the DoD exempts credit unions from the proposed changes, including new coverage under an expanded definition of “consumer credit”.
In the alternative, if the Department does not institute an exemption for either all federally insured depository institutions or credit unions, NAFCU believes that the Department should at the very least consider a carve-out for specific regulated products such as payday alternative loans (PALs).
Additionally, Berger presses the Department to require servicemembers and their dependents to self-identify.