The Defense Credit Union difference is a topic I have discussed many times in the past. I return to it again as our industry prepares to meet with Congressional leaders and regulatory officials because it is important to highlight the role our military and veteran community has played in the evolution of our industry.
I am willing to bet that virtually all credit unions in the United States have at least one military/veteran in their field of membership. Thus, “serving those who serve our country” is something ALL credit unions do—and do very well.
These military and veteran communities shape credit union operations in many ways. Here is how:
The military as an institution is, and continues to be, a gateway toward greater reforms in various parts of our society. In terms of technology, it was mass transportation and communication via rail and telegraph during the Civil War, jet engines and digital photography during WWII and the Cold War, and many more innovations we now consider part of our everyday lives. Apart from technological breakthroughs, there were many innovations in the way human capital is managed, medical advancements, and better ways to integrate strategic design in business planning that started with the military.
This trend and practice continues today—and the financial services sector is no exception. The idea of influencing people’s financial habits, controlling their access to credit, and how to protect their savings has enormous appeal. In fact, our industry was significantly changed because of military experimentation. How we operate today is a direct result.
Sometimes the result is positive, such as the ability for credit unions to provide demand deposits and checking accounts. I am not sure how many people realize the critical role our military played in the debate. It was in 1974 when U.S. Forces Korea (USFK) suggested through channels that credit unions be allowed to compete and operate overseas. Military Bank Facilities were not performing well overseas and simple banking fees were outrageously high.
An alternative was needed. Thus, credit unions were asked if they could fully compete with banks and offer the same services at a fraction of the cost. The initial answer was not necessarily “no.” However, the Federal Credit Union Act would need to be amended to allow credit unions to provide demand deposits and checking accounts. Thus, DoD’s involvement and support served as an important catalyst in winning the argument on Capitol Hill. As a result, the Federal Credit Union Act was amended a few years later. The experiment was a success and today all credit unions provide these types of accounts.
However, sometimes military experimentation has a mixed result. The Military Lending Act is a perfect example. While the intent behind the act is primarily to prevent predatory lending, the law has led to many unintended consequences. Despite these flaws, the Military Lending Act is now being used as a model for the rest of our society. As such, Veterans and Consumers Fair Credit Act mirrors the MLA and was re-introduced in the current Congress. This legislation would extend the same loan restrictions to each borrower, military-connected or not. The experiment and debate continue.
My point is this—as our industry shapes and implements its advocacy strategy in 2022, we ought to keep an eye on potential legislation or regulatory changes that focus on our military and veterans. Some are good, some not-so-much. Here is a list of bills and initiatives to watch in 2022 which are veteran focused or have a veteran impact—all of which will impact the entire industry:
Currently in the 117th Congress:
- The 2023 National Defense Authorization Act (Winning the NDAA Argument is important for all credit unions)
- The HASC-directed DoD Study on Access to Financial Institutions
- H.R. 1491 – Fair Debt Collection Practices for Servicemembers Act
- S. 1368 – The American Housing and Economic Mobility Act of 2021
- H.R. 5189—The Member Business Loan Expansion Act
- S. 2508—The Veterans and Consumers Fair Credit Act
From the 116th Congress (issues that are still in the news):
- H.R. 2305 – Veteran Business Lending Exemption
- H.R. 3642 – Improving Credit Reporting for All Consumers Act
- Postal Banking Issue (Credit Union Alternative)
National Credit Union Administration:
- Changing NCUA Regulation 721.3 (b) (2) (i) through (vii) “Charitable Donation Accounts – Allow donations from CDAs to veteran service organizations
Your credit union’s support for military and veteran members in your community is vital for our entire industry. Plus, understanding how the military and veteran community has shaped/can shape our industry bolsters your interaction with Congressional leaders and regulatory officials. Including military and veteran communities in your message is something your entire Congressional Delegation can support.
Advocacy is a vital part of keeping our credit union industry healthy. And there are no better people to advocate for credit unions than the people who work every day to serve their members. In the end, it’s not about money–it’s about making our lives, families, and communities stronger.
Thank you for doing this important work!
Want to learn more about the legislation and regulations mentioned above? Join us for our Defense Matters Broadcast on February 24 at 2:00 ET. Register online at www.DCUC.org/DefenseMatters2022