A proposed regulation from the Department of Defense that would broaden the types of loans covered by the Military Lending Act could affect credit union lending.

Under fire in the proposal were payday alternative loans as currently allowed by the NCUA, some of which would be off limits to military service members and their families. Some credit card programs and overdraft protection loans would also fall afoul of the new rules.

"Before finalizing NCUA's payday lending alternative rule, we specifically considered how NCUA's rule would fit with existing Defense Department regulations and determined that they were in sync." NCUA Board Chairman Debbie Matz said in a statement. "However, the Defense Department's new proposed rule would broaden the definition of 'consumer credit' under Military Lending Act regulations in a way that would prevent federal credit unions from making payday alternative loans permitted by our rule."

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