CUNA and the Defense Credit Union Council (DCUC) met with Department of Defense (DoD) officials Wednesday to discuss the need for additional guidance relating to changes to the Military Lending Act. CUNA Chief Compliance Officer Jared Ihrig and DCUC President/CEO Tony Hernandez attended the meeting with Andy Cohen, director of the Office of Financial Readiness at the Office of the Under Secretary of Defense (Personnel and Readiness); Fred Drummond, deputy assistant secretary for Force Education and Training; and Lt. Col. Reggie Yager, acting director of Legal Policy.
“We’ve been seeking guidance from the DoD on these MLA changes for many months now. Credit unions deserve unambiguous guidance on how they can continue service to servicemembers and their families without running afoul of the MLA,” Ihrig said. “The DoD recognized our concerns about implementation of the credit card provisions, and said they would listen to credit unions and other industry concerns about difficulties they experience in implementing the regulation over the coming months, but advised that the forthcoming guidance will not touch upon the credit card provisions set to go into effect on Oct. 3; rather such guidance will address clarifications and ambiguities of regulatory provisions that became effective in October 2016.
"Department officials also indicated they have been consulting with other federal banking regulators, including NCUA and the Consumer Financial Protection Bureau, in developing additional guidance, and hope to meet with federal banking regulators near the end of October to further assess efforts of the regulatory implementation process by affected creditors and financial institutions," he added.
The changes to the MLA were finalized in July 2015, expanding the types of loans covered by the rule and establishing limitations on terms of consumer credit extended to servicemembers and their dependents. Many changes became effective in October 2016, and credit card provisions changes will become effective Oct. 3.
CUNA and DCUC sent a letter on May 11 sharing findings indicating that military credit unions were being forced to withdraw consumer-friendly products from the market, because of unclear regulations.
That letter also suggests specific changes to the MLA rule to lessen or eliminate harm to servicemembers. CUNA estimates approximately 466,000 servicemembers are credit union members, not including spouses or dependents.
During today's meeting, CUNA and DCUC urged the DoD to issue guidance as soon as possible on the areas of concern covered in the letters.
The DoD indicated that it has sent draft guidance several weeks ago to the Office of Management and Budget (OMB) about the sections of the MLA that became effective last year, and that the department continues to work with many back and forths between OMB and DoD, and recognizes the need of the industry to have the guidance in hand as soon as possible.
Also on Wednesday, a bipartisan group of 6 members of Congress wrote to Cohen asking DoD to consider ways to relieve the MLA's regulatory burden on credit unions.