Military personnel should be better educated on how to handle their finances and credit unions are doing a great deal to help in this area, Pentagon Federal Credit Union President/CEO Frank Pollack told lawmakers at a hearing on Thursday.
Pollack said at a hearing of the Senate Banking Committee that service members should be as well prepared to deal with their finances as they are to go to battle.
He cited the efforts of his credit union, and others with close ties to the military, to provide low rates, financial counseling and other services for their members.
Pollack, whose Alexandria, Va.-based credit union has assets of $15 billion and more than a million members, said that military credit unions see their work “as a labor of love to those who serve our country.’’
However, another witness, Navy-Marine Corps Relief Society President/CEO Charles Abbot, said that many banks and credit unions with facilities on our near military facilities charge excessive overdraft fees to military personnel.
Abbot, a retired Navy admiral, said those institutions should “be held to a higher standard of service.’’ Pollack didn’t respond to that remark during his testimony.
Sen. Richard Shelby, the panel’s top Republican, asked Pollack if some of the predatory financial practices made to military personnel were the result of the failure of one or more regulatory agency.
Pollack replied that he couldn’t address that issue but said “if we properly educate our young people they wouldn’t make many of the mistakes that they do,’’ he told Shelby (R-Ala.).
Committee Chairman Tim Johnson (D-S.D.) asked Holly Petraeus, who heads the Consumer Financial Protection Bureau’s office that deals with issues affecting military personnel, whether she would be able to accomplish more if the CFPB had the power to regulate payday lenders.
She replied that she would have more enforcement power if the CFPB could send in examiners to nonbanks.
While the Dodd-Frank bill that created the bureau gives it power to regulate nonbanks, it cannot do so until it has a permanent director.
Senate Republicans have vowed to block the confirmation of any nominee unless President Obama and Senate Democrats agree to restructure the agency so it is governed by a five-member board rather than by a single director.
Petraeus recounted a conversation she had with a CEO of an Ohio credit union, whom she didn’t name, who told her one of his branches was located right next to a pawn shop and payday lender and he was the only one subject to federal regulation.