The two major credit union trade associations were joined by four bank trades and the Financial Services Roundtable in a letter urging the Federal Financial Institutions Examination Council and its member agencies to limit examinations related to the Military Lending Act.
The letter was signed by the Credit Union National Association (CUNA), National Association of Federal Credit Unions (NAFCU), American Bankers Association, Association of Military Banks of America, Consumer Bankers Association, Financial Services Roundtable and Independent Community Bankers of America.
With the Oct. 3 implementation date of MLA rule just a month away, the financial trades expressed concern that depository institutions—many of which previously did not offer products covered by MLA until the Department of Defense's recent changes to the rule—may not be ready for full MLA examinations.
Moreover, the trade groups said "important issues remain unresolved" as the Oct. 3 compliance deadline now is approximately a month away.
"Given the delays associated with clarifying the rule and setting up systems to ascertain military status — and the severe penalties for MLA violations — we urge the agencies to provide express assurances that MLA examinations will be limited to inquiries about the status of preparations to comply and that examiners will postpone transactional testing for compliance until after March 3, 2017 — giving industry six months to implement and test its MLA compliance systems," the letter said.
The letter notes the CU/bank trades have held multiple meetings with DoD staff in 2016, and had asked for publication for comment of an interim final rule. Instead, DOD's interpretive rule was published in the Federal Register on Aug. 26.
"Without clear guidance on how to interpret and comply with several requirements of the Rule, depository institutions have been unable to finalize and test their MLA compliance policies and programs," the letter said. "Similarly, the Agencies have been unable to publish examination procedures, which depository institutions review to confirm their understanding of a new regulation and ensure their implementation plans conform to supervisory expectations. While we appreciate DoD's responsiveness to industry concerns and the issuance of the interpretive rule, our members need time to review, interpret, and implement the recently published interpretive rule, implement changes, make and test operational adjustments, and train staff."
