Defense CUs’ focus is on service to military, not profits

October 23, 2019

Defense credit unions provide products and services to military members and families with an eye toward member service—not profits, leadership from CUNA, the Defense Credit Union Council and the National Association of Federally Insured Credit Unions wrote in the Military Times Wednesday. Responding to a letter saying banks and credit unions should be treated the same on military bases, CUNA President/CEO Jim Nussle, DCUC President/CEO Anthony Hernandez and NAFCU President/CEO Dan Berger outlined how for nearly a century credit unions have fulfilled their mission for military families.

“Defense credit unions’ focus is providing quality financial services to our men and women in uniform. This credit union ethos is evident whether it involves opening a checking account, obtaining low-interest credit, or learning how to properly save for retirement-defense credit unions proudly serve their communities while protecting against financial predators outside the gate,” the letter reads. “In addition to member support, defense credit unions also manage the Department of Defense’s (DoD) substantial cash requirements without charge, enabling immediate expeditionary support. Defense credit unions are also asked to assume responsibilities for the government’s daily deposits into the Treasury General Account, such as commissary, post exchange and MWR activities.

“Unlike other financial institutions, defense credit unions do this on a not-for-profit basis — with their bottom line being service, not their shareholders,” it adds.

Credit unions and banks are currently battling over a provision in the Senate-passed version of the National Defense Authorization Act (NDAA) for fiscal year 2020. Section 2821 would  expand the exemption that allows for the waiving of certain fees and land lease costs for credit unions on military installations.

CUNA/League advocacy helped ensure removal of a more troublesome version in the original House NDAA, and now members from both chambers are in conference committee to work out the differences between the two bills.

This focus on service to their members and their base, over profits, has led Congress to give the DoD discretionary authority to allow credit unions to use land and space on military bases at a nominal rate. Historically, defense credit unions have been asked to remain on base to alleviate the high transactional costs coupled with poor service by other financial institutions. It is no secret, being member-owned and not-for-profit is how defense credit unions keep interest rates low and responsive to member needs (e.g., deployment), which improves the financial readiness of our military. Other financial institutions simply cannot match the credit union difference.

The organizations note that banks already have the ability to obtain such low-cost leases under the Military Leasing Act, which states they can obtain such leases if they can demonstrate how they would use the lease to provide value to men and women of the base.

“However, banks have not exercised this authority. Instead, they have opted to end-run DoD and go to Congress to get a handout under the guise that too many banks have had to leave military bases due to the cost of leases making military banking less profitable,” the letter reads. “Rather than seek a productive solution available to them under current law, they have opted to target their long-time nemesis credit unions in the process. We hope the NDAA conferees will recognize the banker 's games for what they are — a charade to once again attack credit unions- and reject this provision in the NDAA.”