Brawl over no-cost land leases between banks and credit unions reignites

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The fight over no-cost land leases on military bases continues between credit union and banking trade groups.

The debate was revisited in the 2021 National Defense Authorization Act. A provision that would grant banks access to the no-cost land leases credit unions currently enjoy is being contested once again.

Jim Nussle, president and CEO of the Credit Union National Association; Anthony Hernandez, president and CEO of the Defense Credit Union Council; and Dan Berger, president and CEO of the National Association of Federally-Insured Credit Unions, voiced their opposition to the move in a letter to Reps. Adam Smith, D-Wash., chairman of the House Armed Services Committee, and Mac Thornberry, R-Texas, ranking member of the committee.

“Defense credit unions do not fear competition from banks, especially on base, as there can be an important role for both institutions to play,” the trio wrote in their letter dated Thursday. "But credit unions simply put our members first—ahead of profit."

Banks have the ability to obtain leases at "a nominal cost" under the Military Leasing Act, the letter said.

"We started trying to get legislative relief five years ago because we were told by DoD that we would have to get legislative relief [for DoD] to provide parity between banks and credit unions," said Steven J. Lepper, president and CEO of the Association of Military Banks of America. "DoD has repeatedly said that they are unable — based on the way that the legislation is currently written and the way their policies have been interpreted — to provide banks the same level playing field that the credit unions are operating on."

"That's why we're on the Hill," he continued, adding that if banks are unable to have the provision granted, then credit unions should also pay for the leases.

The NDAA outlines the annual budget for the Defense Department so Congress must pass a new version each year. Previous proposed versions of the legislation included similar language favorable to banks, but such language has been struck before those bills passed.

Current law allows CUs that certify that their membership is at least 95% military personnel or federal employees to rent space on military bases for free. Banking groups have asked for similar treatment, arguing that 40% of military banks have closed their doors over the past 15 years because the Department of Defense fails to treat CUs and banks equally on military installations.

The Senate's version of the NDAA has yet to be released, but a summary package released this week alludes to language that would allow banks access to no-cost land leases.

This story was updated at 4:41 P.M. on June 12, 2020.

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