The NCUA Must Step Up for Overseas Servicemembers

When servicemembers are overseas, the government should have their backs. Whether it’s housing or medical care, our servicemembers deserve the highest level of support the U.S. can offer. Unfortunately, a recent NCUA decision leaves our deployed soldiers and their families vulnerable and without basic, decades-long financial protections.

After World War II, the Department of Defense (DoD) established the Overseas Military Banking Program (OMBP), also known as Community Bank, to provide financial services to servicemembers, their families and military commands at 60 overseas military installations. Despite its name, OMBP is not a bank. Rather, it is a DoD program that supports the unique financial needs of the overseas military: Local currency exchange, deposits, loans and cash for commissaries, other financial institutions and military efforts.

Effective next year, a big bank will end its decades of support for this program. But when banks step out, credit unions step in.

Navy Federal Credit Union has served the financial needs of the military, veterans and their families, whether at home or overseas, for more than 90 years. That is why Navy Federal felt compelled to respond when the DoD came to a recent Defense Credit Union Council conference to encourage credit unions to submit proposals to operate the OMBP.

Our long track record of serving the military overseas made Navy Federal the perfect partner for this mission-critical program. We did not choose to bid on OMBP to compete with credit unions; we stand with other credit unions and are motivated by our collective mission of service to the military. We were delighted when, last month, the DoD awarded Navy Federal the OMBP contract, even though it means we are precluded from promoting our own products and services at Community Bank. Our sole mission is to serve those who serve.

As Jim Nussle of CUNA and Dan Berger of NAFCU said, “This is a historic opportunity for Navy Federal and the credit union industry.” They highlighted a time-proven pattern: Banks pull out of underserved communities, and credit unions step in to “answer the call of service.”

While Navy Federal stepped up to serve, the NCUA – the government agency specifically created to insure credit union deposits – has yet to do the same. The NCUA has declined to extend deposit insurance to the OMBP accounts. Under the law, the NCUA can insure any credit union activity it “may determine to be proper,” but somehow, it has not found it “proper” to provide insurance to a DoD program that supports deployed overseas servicemembers and their commands. And this program is already backed by the government, with practically zero risk of loss.

Deposit insurance is the government’s commitment to account holders that their money is safe up to a certain amount. For both banks and credit unions, it’s currently $250,000.00 per account. The NCUA’s counterpart on the banking side, the FDIC, has extended insurance to OMBP accounts for decades without issue. The NCUA can and should do the same.

It is rare that we see resistance to our mission-driven efforts that we are experiencing from the NCUA.  Without a committed insurance partner in this OMBP endeavor, the NCUA is going to leave servicemembers and their families overseas without the financial support that they deserve. As this population has sacrificed so much for us, we must, at minimum, provide them with the basic protections to which they are entitled.

Navy Federal is honored to support this vital military program and is committed to bringing our world-class service to the servicemembers who need it. We urge the NCUA to change its mind and step up to meet its mission.

Mary McDuffie is President/CEO of the $165.2 billion Navy Federal Credit Union in Vienna, Va.