CU-Bank Feud Likely to be Renewed as Congress Considers Defense Bills
Bill markups come amidst Pentagon study on rent benefits for financial institutions on military bases and a warning from the CFPB.
Committees in both the House and Senate are scheduled to mark up their annual defense authorization bills in the next two weeks—annual events that inevitably cause a flare up of the battle between banks and credit unions over rent benefits on military bases.
The markups will take place at the same time a study on rent benefits for financial institutions is being conducted by the Pentagon. Little is known about that study or when it will be released.
Financial Regulations on Military Bases
Under current law, credit unions, but not banks, may have rent-free branches on military bases, a benefit banks have long argued they too should have. Credit union trade groups have fired back that they are non-profit, member-owned institutions and as such they alone should be given that status.
As the committees prepare for their work, the Consumer Financial Protection Bureau (CFPB) has issued a new warning concerning companies that target servicemembers with costly loans for expensive items. In many cases, those companies are located just outside the gates of military bases.
“Despite existing federal protections, the CFPB and the Department of Defense continue to closely monitor these companies for abuses, particularly those that seek out servicemembers due to their steady paychecks and the ability to structure repayments through the military allotment system,” the agency explained.
The military allotment system makes it easier for military personnel to make automatic payments directly from their paychecks.
Some lenders, the CFPB said, treat the allotment system as a means of prioritizing repayment of their loan over other payments to be made by a servicemember.
“While actions have been taken to stop abuses, it’s clear that more work needs to be done to prevent companies from leveraging the military pay system to their advantage,” the bureau stated.