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The free rent benefit that credit unions receive on military bases has resulted in banks—which do not receive those benefits—leaving bases, narrowing the financial choices for servicemembers, Andia Dinesen, executive vice president of the Association of Military Banks of America, told a Senate committee Thursday.
“Today, whether as a result of the digital banking revolution or the increasing lease costs banks must pay but credit unions do not, most on-base banks have closed their doors,” she told the Senate Banking Committee during a hearing on financial protections for servicemembers, veterans and their families. “Today, most bases have only a credit union. This leaves our military families without the face-to-face financial guidance many of them want and need from the sources they have traditionally considered to be the ‘most trusted.”
She added that servicemembers deserve more financial choices.
Annual Fight
Each year, the military bankers and credit unions fight over the free rent benefits, with banks arguing that the policy provides credit unions with an unfair advantage. The two sides usually fight over whether the annual defense authorization bill should expand the rent benefit. This year, neither the House nor the Senate bill addresses that issue.
There’s a good reason for that, contends one credit union lobbyist.
“The fact is that there are significant differences between for-profit banks and not-for-profit credit unions,” Brad Thaler, NAFCU’s vice president of legislative affairs, wrote, in a letter to committee members after Dinesen’s written testimony had been released.
Reduced Opportunities
Dinesen said her organization remains concerned about the narrow choices that servicemembers have.
“We remain concerned that the reduction in available bank lending opportunities may lead servicemembers and their families to turn away from the regulated financial industry back to alternative and predatory lenders,” she said.
Other witnesses testifying at the hearing applauded efforts by the CFPB to protect servicemembers, many of whom are young and are not experienced in dealing with financial matters.
Many Republicans argue that the CFPB has too much power and because it is not subject to the annual appropriations process, it is not accountable to Congress. The Supreme Court is currently considering a case dealing with the CFPB’s funding.
CFPB Protections
Cory Titus, director of servicemember compensation and veteran benefits at the Military Officers Association of America, told the committee that his association is concerned that efforts to weaken the CFPB will remove much-needed protection.
“We believe that without a robust CFPB, servicemembers, veterans, and their families would lose a vital defender and the only federal agency mandated to safeguard their financial interests,” Titus said.
Senate Banking Committee Chairman Sen. Sherrod Brown, D-Ohio, agreed that the CFPB is a key to financially protecting servicemembers.
“You really cannot say you support veterans, you support servicemembers while trying to tear down the CFPB,” he said during the hearing. The CFPB this week released a report stating that from 2011 through 2022, servicemembers, veterans, and their families submitted more than 323,000 complaints, with 66,400 complaints submitted in 2022 alone.
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