Fight Over Rent-Free Credit Union, Bank Access to Military Bases Takes New Turn

The battle between over whether banks on military bases should receive the same rent-free access that credit unions now enjoy continues to take new and surprising twists.

In the House, a Republican who had been expected to offer an amendment that would have provided banks with the benefit did not offer his plan during a committee markup of the annual defense authorization bill Wednesday.

Meanwhile, the Senate Armed Services Committee released the text of its version of the defense bill on Wednesday and that measure contains language to allow banks to have rent-free access.

Under federal law, credit unions may receive rent-free space on military bases, but the same is not true for banks.

That places banks at a decided disadvantage, according to Steven Lepper, president/CEO of the Association of Military Banks.

“Our banks over the past 10 years have left 40% of the bases,” he said, adding that as rent increases, they are deciding to move off base.

Rep. Trent Kelly (R-Miss.) gave no reason why he dropped his proposal and his office did not respond to a request for comment.

Credit union and bank trade groups had lobbied members of the House Armed Services Committee before the markup.

The Senate Armed Services Committee marked up its bill in closed session last month. The text of the bill was released Wednesday and the committee report on the measure was released Thursday.

“The committee recommends a provision…to require the Department of Defense (DOD) to ensure that policies governing depository institutions and credit unions operating on military installations are equally applied to all relevant institutions,” the report states.

“As servicemember financial practices evolve to reflect the growing prevalence of online banking, it makes little sense for the DOD to mandate that the Services provide a subsidy in the form of free rent, utilities, or other logistical support to any particular financial institution,” the report continues.

The provision would require the Department of Defense to develop a plan to treat all financial institutions equally.

As might be expected, credit union trade groups applauded the House measure, but were disappointed with the Senate bill.

“We are pleased with the House version of the [defense bill] as it protects the discretionary waiver from being watered down by banking profit motives,” said Tony Hernandez, president/CEO of the Defense Credit Union Council.

CUNA President/CEO Jim Nussle said he was pleased the House panel “recognized the inherent differences between the credit union mission and structure and the profit-driven model that banks operate under.”

The trade groups vowed to continue to fight the Senate bill.

“We will continue to urge lawmakers to oppose this provision, which essentially would treat Wells Fargo and other big banks – who have soaring profits despite a long track record of consumer abuses – the same as local, not-for-profit credit unions,” said NAFCU President/CEO B. Dan Berger.

Lepper said that last year, banks and credit unions tried to work together to ensure financial institution access to military bases.

Last year’s House defense bill attempted to accomplish that, but a drafting error resulted in the measure including a provision that could have eliminated credit union rent-free access, while providing the benefit to banks.

In 2018, the Senate version of the defense bill did not include any rent provision.

The conference report on the bill did not include the provision, resulting in credit unions maintaining their access.

Lepper said he is concerned that could happen again this year.

“I’ve seen this movie before and I didn’t like the way it ended the last time,” he said.