Executive Summary

• &nbspThe Department of Defense (DOD) recently issued a proposal to amend its rule that implements the Military Lending Act (MLA). The proposal would significantly expand the scope of products covered by the MLA, including credit cards.

• &nbspSpecifically, the proposal would amend “consumer credit” to extend the definition to a broader range of closed-end and open-end credit products; the proposed definition is consistent with that of the Truth-in-Lending-Act (TILA), as implemented by the CFPB’s Regulation Z.

• &nbspThe proposal would also amend provisions of DOD’s rule regarding the manner in which a creditor can assess whether a consumer is a “covered borrower.”

• &nbspIn addition, the proposal would modify disclosures that a creditor must provide a covered borrower, as well as implement enforcement provisions of the MLA.

• &nbspCUNA continues to work with the Defense Credit Union Council (DCUC), leagues, and credit unions. DOD is accepting comments until November 28; please send your comments to us by November 7.

• &nbspClick here for CUNA's detailed summary.

• &nbspIf you have any questions or comments, please contact CUNA Senior Assistant General Counsel Luke Martone at lmartone@cuna.com.

Questions to Consider Regarding the Proposed Rule

Question Title

* 1. Do you support the proposed definition of “consumer credit,” which is intended to make the term consistent with that in Regulation Z? If not, can you offer any alternative definitions of “consumer credit” that would achieve the DOD’s objective of expanding the reach of its MLA rule?

Question Title

* 2. If adopted as proposed, to what extent, and in what manner, would DOD’s rule affect the availability of consumer credit to servicemembers and their dependents or have other consequences?

Question Title

* 3. If adopted as proposed, to what extent would a creditor, as a practical matter, need to develop separate classes of credit products, namely, one class of products for covered borrowers and other classes for other consumers?

Question Title

* 4. DOD specifically seeks input regarding exemption for credit unions: If DOD continues to pursue an approach that defines “consumer credit” to be generally consistent with certain credit regulated under TILA, should DOD consider a limited or complete exemption for an insured depository institution or insured credit union? What legitimate basis could there be for any exemption for an insured depository institution or insured credit union from the requirements of the MLA, particularly if under this approach other financial institutions would be subject to DOD’s regulation? What other protections relating to credit products already are afforded to—or could be improved for—servicemembers and their dependents?

Question Title

* 5. If DOD continues to pursue an approach that defines “consumer credit” to be generally consistent with certain credit regulated under TILA, should DOD consider including one or more exemptions for certain types of credit products, such as student loans? What legitimate basis could there be for any particular exemptions for certain credit products?

Question Title

* 6. Apart from the conditional exclusion proposed for a credit card account that charges bona fide fees, should DOD consider providing one or more exceptions from the charges that must be included in the MAPR for de minimis bona fide fees associated with an open-end credit line? If so, should that type of exception be limited to an open-end line of credit connected to a deposit account? If so, please specifically describe which fees on these accounts would be bona fide fees eligible for such an exception.

Question Title

* 7. If DOD continues to pursue an approach that defines “consumer credit” to be generally consistent with certain credit regulated under TILA, should DOD consider including an exemption specifically for a credit card account under an open-end (not home-secured) consumer credit plan? Would the consumer protection under TILA be sufficient to be consistent with the requirements of MLA? How would an exemption for consumer credit offered through a credit card account be articulated?

Question Title

* 8. As a credit union, to what extent do you think DOD’s proposed changes will affect your operations, both directly and indirectly?

Question Title

* 9. Any other comments or questions.

Question Title

* 10. (Optional) What is your credit union's asset size?

Question Title

* 11. (Optional) Please provide information about yourself and your credit union.

Thank you for your input and time - CUNA Regulatory Advocacy Team
( Privacy & Cookie Notice

T