Credit union advocates recommended that lawmakers amend legislation intended to expand military members’ access to banking services by eliminating a provision that would allow banks to operate on military bases essentially rent-free – a benefit which currently applies to credit unions. Banking trades specifically have advocated that the provision be included in the final, combined version of the legislation to facilitate a level playing field between the two types of entities.
The National Association of Federally-Insured Credit Unions (NAFCU) and the Credit Union National Association (CUNA) have called for the elimination of the “nominal lease provision” from the FY 2019 National Defense Authorization Act (NDAA).
“Credit unions have proven their commitment to provide military members, veterans and their families with safe, affordable financial products and services, which is why the Department of Defense offers rent to credit unions on military bases at a nominal rate,” NAFCU President and CEO Dan Berger said in a statement. “If this provision is included in the final 2020 NDAA, the credit union industry could be disadvantaged.
“NAFCU, in partnership with the Defense Credit Union Council, will continue to advocate against this provision in the final bill and request legislators to not give big banks, who are known for their consumer abuses, the ability to operate rent-free on military bases.”
NAFCU pointed out that although DoD has chosen to exercise its discretion to provide space for credit unions to operate on military bases at a nominal rate, the agency is not required to do so. The trades indicated that their concerns over the discretionary authority afforded to DoD could be addressed by amending Section 2821 of the NDAA.
“Although we recognize the important role both credit unions and banks can play for our men and women in the military in the provision of traditional financial services and in protecting our troops from predatory lenders, we remain concerned that Section 2821’s intent to tie the fate of banks on the lease issue to credit unions and their good work misses the mark, and would ultimately disadvantage credit unions,” NAFCU wrote in a letter to congressional leaders of the House and Senate committees on armed forces. “Rather than granting nominal leases to banks and credit unions, the DoD could very well decide to stop granting nominal leases altogether. We do not want to subject the ability of defense credit unions to serve their members to the political winds surrounding big bank consumer abuses.”
Banking trade organizations wrote to legislators in July 2018, urging them to draft legislation that would require DoD to “accept the value of services provided by military banks as full payment for any lease, services, and utilities costs for the space they occupy on military installations.” The banking trades noted that similar legislation was enacted more than a decade prior, affording credit unions currently operating on military bases the same benefit.
The American Bankers Association, the Independent Community Bankers of America and the Association of Military Banks of America (AMBA) have argued that the provision is necessary to stop the trend of bank closures on military bases, Politico reported. Banks have closed on 40 percent of the bases that used to have them since 2004, according to a fact sheet AMBA included with a letter to congressional leaders in August.