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Section 2821 of the National Defense Authorization Act for the 2020 fiscal year includes a significant change that means a more-level playing field between banks and credit unions located on military installations.
The issue has to do with how banks are now required to compete with credit unions on military bases and posts beyond their tax-exempt status. Credit unions currently enjoy rent-free status on all military installations. They have benefited from this preferred status for over a decade.
Banks, on the other hand, do not enjoy this same benefit. The Department of Defense charges rent for all banks, which increases with each successive lease agreement.
“It’s bad enough that bank-like credit unions rub bankers’ collective noses in the dirt because of their tax exemption,” OBA President and CEO Roger Beverage said. “But they should not be given further advantages like not having to pay any rent for the space they occupy on a military installation. That’s just nuts.”
Thanks to Sen. Jim Inhofe, the Senate version includes parity language that requires the DoD to treat banks and bank-like credit unions equally by providing rent-free access for all financial institutions located on a military installation. Sen. Inhofe is also one of the conferees charged with the responsibility of reconciling the House and Senate versions of the NDAA.
“We have asked Sen. Inhofe to do everything possible to preserve (the parity language) in the final fiscal year 2020 NDAA package,” Beverage said. “We’re not asking the Department to take anything away from these cooperative banks which masquerade as credit unions; we’re simply asking that banks and such credit unions located on an army post or an air force base be treated equally. Either provide banks with the same rent-free access enjoyed by these credit unions, or charge these credit unions the same amount of rent that banks are charged.”
Beverage pointed out that over the past 15 years there has been a 43 percent decline in the number of bank branches on military installations. That decline is likely to continue unless Congress acts.
“Bank-like credit unions have for too long had an advantage that they continue to abuse to this day,” Beverage said. “We’re talking about providing financial services to military families while they are on the installation. We’re talking about convenience, responsible lending, financial education – services that our warriors deserve.
“What we’re asking for has no negative consequences for bank-like credit unions who already have a huge competitive advantage over every bank in Oklahoma because of their tax exemption,” Beverage said. “That’s enough.”