CUNA has asked the Department of Defense for six-month delay in implementing new rules designed to protect service members from predatory lenders.
Last week officials with CUNA and the American Bankers Association said they were still confused by the rules, scheduled to take effect Oct. 3, even as the DoD issued clarifications.
Mainstream banks and credit unions were not the target of Military Lending Act rules that were announced in July 2015. Instead, the rules were designed to stop payday lenders, title loan lenders and other that targeted cash-strapped service members and their families with loans with exorbitant interest rates that were easy to get and difficult to escape.
Jared Ihrig, CUNA’s chief compliance officer, asked for the delay in an Aug. 30 letter to Deputy Assistant Secretary of Defense Diana Banks. As an alternative, he asked that credit unions that are trying to comply with the new rules be given an extra six months before they would be punished for any unwitting infractions.
“We remain troubled that the regulation may ultimately, and unintentionally, have a negative impact on the delivery of high quality, reasonably priced financial products and services to our troops and their families,” Ihrig wrote. “Credit union products and services are beneficial alternatives to those offered by predatory lenders, particularly those that exploit military personnel.”
