Groups Seek DoD Clarification
While trying to shield soldiers from worry over mounting debt so they can be battle ready, the rule has CUNA and the defense CU Council and NAFCU concerned. In a letter to the DoD, CUNA wrote, "...implementation of certain provisions could be problematic and have an adverse affect on credit unions, service members, and their families."
CUNA, DCUC and NAFCU offered several recommendations to clarify the law and mitigate any negative effect, including reworking the definition of "annual percentage rate," and omitting optional charges and late fees from the final rule.
NAFCU pointed out in its letter to the DoD that requiring oral disclosures would be difficult for service members and their families who apply for loans online and could limit the loan process to in-person branch activity. They asked for flexibility in the method and delivery of such disclosures, such as a prerecorded telephone message or Voice over Internet Protocol.
All CU trades were highly supportive of the effort to curtail predatory loans to members of the armed services while keeping credit options available to them. All expressed willingness to work with the DoD to improve on the language of the law, the John Warner defense Authorization Act for Fiscal Year 2007, recently signed by President Bush.
A Reuters story noted that representatives of payday lenders are also concerned, as are banks, particularly because the DoD is not seen as an expert in writing financial regulations.