ALEXANDRIA, Va.—NCUA plans to formally comment on a proposed rule from the Department of Defense that the agency believes could have an unintended consequence of reducing credit unions’ ability to offer certain kinds of credit, including payday alternative loans, to service members.
The proposed rule, “Limitations on Terms of Consumer Credit Extended to Service Members and Dependents,” would widen the types of loans covered by the Military Lending Act, impacting CUs that lend to military service members and their families.
In the November issue of The NCUA Report, Chairman Debbie Matz outlined the agency’s intent, explaining NCUA has already provided two rounds of informal interagency comments.
“We will continue to work diligently with the department to reach the mutual goal of protecting members of the military without limiting the affordable financial services they can receive. Our long-term goal is to empower military members to break free of their reliance on payday loans by improving their credit scores and qualifying them for lower-priced services. This would effectively raise the take-home pay for millions of hard-working military families.”
The effects of the rule could have the biggest impact on CU payday lending alternatives, analysts have stated. NAFCU President Dan Berger sent a letter to the Department of Defense requesting a 45-day extension of the comment period on the proposed rule. http://www.cutoday.info/Fresh-Today/NAFCU-CUs-Need-More-Time-To-Assess-DoD-Proposal
Currently, comments are due Nov. 28.
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