CUNA Urges Senate on Blocking Military Predatory Lending

September 14, 2006

FOR IMMEDIATE RELEASE
Contact:
Patrick Keefe, CUNA Communications
(202) 508-6765
pkeefe@cuna.com

CUNA urged Senate Banking Committee leaders to act on legislation that prohibits use of abusive practices in financial services which are employed by predatory lenders and directed at members of the U.S. Armed Services.

CUNA President and CEO Dan Mica noted that CUNA and credit unions “strongly support efforts to bring financial education to military bases across the country, and provide an alternative to military personnel and their families from the often abusive services of predatory and payday lenders.” The CUNA leader pointed out that an Aug. 11 report by the Department of Defense cited 19 programs operated by credit unions (out of a total 24) that are providing services such as small loans with reasonable fees and interest rates, as well as financial education and counseling, to armed forces members.

Mica suggested the committee consider provisions of the House-passed Military Personnel Financial Services Protection Act (H.R. 458) in drafting legislation for the Senate to consider. Among the abusive practices that measure would prohibit: Use of symbols, representations or statements that imply the DoD endorses a service or product, (2) require servicemembers to waive rights under the Servicemembers Civil Relief Act and other federal statues, (3) engage in efforts to contact commanding officers to secure repayment of a loan, and (4) require servicemembers to agree to have their military pay garnished to repay a debt.

The complete text of CUNA’s letter to the committee leaders follows:

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September 14, 2006

The Honorable Richard C. Shelby
Chairman
Senate Banking, Housing and Urban Affairs Committee
534 Senate Dirksen Building
Washington, D.C. 20510

The Honorable Paul S. Sarbanes
Ranking Member
Senate Banking, Housing and Urban Affairs Committee
534 Senate Dirksen Building
Washington, D.C. 20510

Dear Senators Shelby and Sarbanes:

On behalf of the Credit Union National Association (CUNA) and America’s 88 million credit union members, I applaud your efforts to examine the Department of Defense’s (DoD) Aug. 11, 2006 report on predatory lending directed at members of the armed forces and their families. CUNA has a close working relationship with the Defense Council of Credit Unions (DCUC), which represents over 270 credit unions and their 10 million members, and is a member of the DoD’s Financial Readiness campaign

CUNA and its member credit unions strongly support efforts to bring financial education to military bases across the country, and provide an alternative to military personnel and their families from the often abusive services of predatory and payday lenders. The DoD’s report cited 24 programs, 19 of which are being operated in credit unions in the US, providing services such as small loans with reasonable fees and interest rates, as well as financial education and counseling.

CUNA urges the Senate Banking Committee to act on legislation that not only is directed at the specific practices of predatory lenders, but includes provisions of the House passed Military Personnel Financial Services Protection Act, H.R. 458, which prohibits a number of abusive practices in connection with financial services to military personnel, including: (1) using of symbols, representations or statements that imply the DoD endorses a service or product, (2) requiring servicemembers to waive rights under the Servicemembers Civil Relief Act and other federal statues, (3) engaging in efforts to contact commanding officers to secure repayment of a loan, and (4) requiring servicemembers to agree to have their military pay garnished to repay a debt.

CUNA believes that a strong military must begin with financially secure military personnel and families, and that unfair and abusive lending serves to undermine military morale, readiness and quality of life. We commend the Committee for closely examining the findings and recommendations of the DoD report on lending abuses near military bases and urge the Senate to adopt legislation to curb these abuses and promote more acceptable lending alternatives.

Sincerely,

Daniel A. Mica
President & CEO
Credit Union National Association (CUNA)
Washington, DC

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