WASHINGTON -
In a letter to the Pentagon, which is developing implementation rules for the new anti-predatory lending law, CUNA asked that optional products and services, like GAP insurance, vehicle warranties, credit insurance and identity theft prevention be excluded from the calculation.
CUNA also urged an exclusion for overdraft privilege and courtesy pay fees. Including the costs for these products and services "will very likely result in an APR that exceeds 36%, "and will likely prevent credit unions from offering these products and services to military members, said CUNA in a letter signed by President Dan Mica and Roland "Arty" Arteaga, director of the Defense CU Council.
One way to do this would be to exclude charges for products and services that are offered voluntarily as part of a loan, said the letter.
At the same time CUNA was submitting its comment letter on the proposed rules a broad-based group of consumer advocates, including the credit union-backed Center for Responsible Lending, was urging the Pentagon to reject the entreaties from the banks and credit unions, opening up a new rift between credit unions and their traditional allies.
The group, which includes the Consumer Federation of America and Consumers Union, said that carving out exemptions for credit unions and banks on voluntary products and services and exempting fees from the calculation of the rate would undermine the intent of the new law.
"The 36% cap on interest rates leaves plenty of room for banks and credit unions to do business responsibly," said Col. Michael Hayden, deputy director of government relations for the Military Officers Association of America.
Many of the same players-the Center for Responsible Lending is an affiliate of Self Help CU, the leading community development CU-fought against the credit union-backed bankruptcy reform bill, which they saw as anti-consumer.
