R.J. Lehmann (L), director of finance, insurance and trade policy, and Alan Smith (R), midwest director and senior fellow, R Street Institute:

“We would urge symmetry with the U.S. Defense Department’s Military Lending Act program, the Bureau of Consumer Financial Protection rules and the Federal Deposit Insurance Corp.’s small-dollar pilot loan program, all of which have settled on a 36 percent annual percentage rate ceiling for small-dollar loan instruments. Given compliance and entry costs, we believe this rate, and not the NCUA’s proposed 28 percent, would better allow credit unions to maximize their ability to serve this market.

To grant credit unions needed flexibility to construct and pricing small-dollar-loan programs, we also believe the maximum application fee should be increased to $50. Moreover, the $2,000 loan limit would only partially satisfy common situations in which credit union members might need emergency short-term loans, such as vehicle breakdowns and emergency medical expenses. We would propose the rules be adjusted to permit higher dollar thresholds and longer maturities.

Finally, we reiterate the need for harmony and alignment among the federal lending regulators. NCUA monitoring of credit unions’ lending programs should remain exempt from duplicative oversight by the Bureau of Consumer Financial Protection and other agencies that might seeking to regulate nonbank loans. Specifically, we believe the safe harbor exemption for credit unions that make loans in compliance with 12 CFR 701.21(c)(7)(iii), should be extended to PAL II programs.”