A Defense Department proposal to strengthen lending protections for troops could end up denying them access to some affordable alternatives to predatory loans, a top credit union regulatory official said Tuesday.
The National Credit Union Administration supports the intent of DoD’s proposal to expand the scope of the Military Lending Act, which protects service members and their family members from predatory lending, said Debbie Matz, NCUA’s chairman of the board.
“However, we are asking that the rule be implemented without the unintended consequence of outlawing affordable credit union loans to the very service members the law was intended to protect,” Matz said at a meeting of the Defense Credit Union Council’s Overseas Subcouncil.
NCUA is the independent federal agency that regulates, charters and supervises federal credit unions.
“We have done the math and found that when fees are included, many credit unions’ short-term loans would exceed the proposed 36 percent military [annual percentage rate] limit” set by the Military Lending Act, Matz said.
Defense officials have proposed a broad expansion of their previous rules implementing the Military Lending Act of 2006, which limits to 36 percent the interest rate on certain forms of credit that can be charged to service members and their dependents.