Banks, Credit Unions Renew High-Stakes Battle Over Military Base Access

As the Senate Armed Services Committee begins to mark up the annual defense authorization bill, credit union trade groups are calling for lawmakers to retain a provision giving credit unions free rent benefits on military installations.

And they want legislators to retain language that makes it more difficult for banks to gain the same benefit—a position that a key banking group said is hypocritical.

“As you consider this important legislation, we once again urge the committee to strike any provisions that would alter the status quo and force the Department of Defense (DoD) to treat banks and credit unions as equal entities in terms of obtaining no-cost land leases and waiver of utilities and service costs for the space they occupy on military installations,” Anthony Hernandez, president/CEO of the Defense Credit Union Council wrote in a letter to the leaders of the Senate committee.

The letter is the first salvo in a perennial battle between banks and credit unions. A credit union receives free rent as long as 95% of the membership served by the branch are military members.

Banks have argued that they should receive the same benefit. Two years ago, the two sides said they had reached a deal, but a drafting error in the defense bill would have thrown credit unions off bases. Before the drafting error could be corrected, the deal between legislators and the financial institutions fell apart.

Hernandez said that banks can apply for rent benefits on military installations if they wish. “Unfortunately, banks choose to ignore this avenue in making decisions to leave the installation despite making record profits,” he wrote in his letter. “This choice is very unfortunate and part of a growing pattern of putting more profit over continued service.” He said providing free rent to banks would create a “slippery slope” that could encourage other for-profit businesses to apply for rental benefits.

Steven Lepper, president/CEO of the Association of Military Banks of America said that banks simply want parity with credit unions and accused credit union trade groups of “hypocrisy.”  He said that while credit unions say that they want to help servicemembers, they are driving banks off military bases.

“AMBA continues to pursue partnership with credit union trade associations to create a level playing field where banks and credit unions are treated equally on military bases,” he said. “Our military families deserve no less than the full range of financial services banks and credit unions operating together can provide.”

The provision is a small part of the defense bill; the current bill totals some 3,500 pages.  But it is a high-stakes issue for the banks and credit unions involved.

Related:

Senate Defense Bill Requires Banks, Credit Unions to Be Treated Equally on Military Bases

DCUC, CUNA and NAFCU Ask House Armed Services Committee to Ignore Banks’ Free Rent Request

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