Credit unions prevail over banks in battle for military base access

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Credit unions are claiming victory in a longstanding battle with banks over no-cost land leases on military installations.

For months banks sought legislative reform that would have granted them the same rent-free access to military bases that credit unions enjoy, but that provision was excluded from the final version of the National Defense Authorization Act, released late Monday.

The legislation maintained the current law, which allows credit unions to rent space on bases at no cost if they can certify their membership is at least 95% military personnel or federal employees.

Credit union trade groups praised House and Senate lawmakers for maintaining the status quo.

“We commend the conference committee for putting our servicemembers’ financial readiness ahead of Wall Street profits in the FY 2020 NDAA,” Credit Union National Association President and CEO Jim Nussle said in a statement.

Both CUNA and the National Association of Federally-Insured Credit Unions advocated against the provision, citing concerns that banks as large as Wells Fargo should not be treated the same as a not-for-profit credit union.

NAFCU President and CEO Dan Berger said changing the current law would have “granted banks the ability to end-run the Department of Defense.”

An earlier version of this legislation included an amendment that would have required the Defense Department to allow banks to operate rent-free on military bases, but that amendment did not pass.

Subsequent bills in the House and Senate were split on whether to extend credit unions’ access to banks, but conferees from both chambers ultimately kept that language out.

“Essentially, the bank lobby tried to pull a fast one and portray themselves as something they are not,” said Tony Hernandez, president and CEO of Defense Credit Union Council. “Credit unions called them on it and once Congress learned the facts, they made the right decision.”

According to the Association of Military Banks of America, 40% of military banks have closed their doors over the past 15 years. AMBA attributes this to the Defense Department's failure to treat credit unions and banks equally on military installations.

In written remarks, AMBA President and CEO Steve Lepper thanked supporters who fought to keep banks on military installations, in particular Sen. Jim Inhofe, R-Okla. Lepper claimed a “one bank-one credit union” policy would provide the best benefit for military families, but said “that policy is rapidly becoming a ‘one credit union monopoly’ on our military bases.”

Lepper added the conflict between the two sides was unfortunate when they should be working together to defend military families against predatory financial entities, and suggested that rising leases and other costs will ultimately force banks off military bases altogether.

Rebeca Romero Rainey, president and CEO of the Independent Community Bankers of America, said in a statement that the group was "disappointed in the conference committee's decision to exclude language that would have created greater access and choice for service members. This language would have helped provide military families with the most comprehensive and competitive financial services possible.”

Rob Nichols, president and CEO of the American Bankers Association, said while the group is disappointed in the outcome, the real victims are members of the armed forces.

“We continue to believe that servicemembers, DoD civilians and their families benefit from having choice and competition among financial service providers," Nichols said. "Unfortunately, their options will remain limited until Congress establishes parity in the treatment of banks and credit unions on military bases."

This story was updated at 4:03 P.M. on Dec. 10, 2019.

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