Consumer financial products pilot program

(a)

In general

The Under Secretary of Defense (Comptroller) shall carry out a 5-year pilot program to develop innovative consumer financial products that encourage savings and wealth-creation among members of the Armed Forces on active duty.(b)

Objectives

Financial products developed under this section may be designed to—(1)increase the rate of savings among members of the Armed Forces on active duty by providing automatic deposit into a savings account of special pay and allowances received by such a member, including special pay and allowances received on account of the deployment of the member;(2)reduce the need for high-cost short-term lending services by providing alternatives to members of the Armed Forces on active duty, such as financial institutions providing an option for such members to receive advances on their salary payments—(A)in a manner that permits such members to receive pay in more frequent installments; and(B)under which any interest or fees on such advances—(i)does not exceed the rate described in section 987(b) of title 10, United States Code; and(ii)adheres to the Affordable Small-Dollar Loan Guidelines of the Federal Deposit Insurance Corporation;(3)address obstacles to traditional consumer banking and lending for members of the Armed Forces with limited credit history; and(4)otherwise encourage savings and wealth-creation among members of the Armed Forces on active duty.(c)

No exacerbation of credit overextension

The pilot program carried out under this section shall be carried out in a manner that does not exacerbate the incidence of credit overextension among members of the Armed Forces.(d)

Implementation

(1)

Selection of military installations

The Under Secretary shall select at least 10 military installations on which to implement the pilot program.(2)

Incorporation into operating agreements

A financial institution seeking to begin operating on a military installation selected by the Under Secretary under paragraph (1), or seeking to renew an agreement to operate on such an installation, shall—(A)agree to offer the consumer financial products developed under this section; and(B)notify members of the Armed Forces that are customers of the institution about the availability of the consumer financial products developed under this section.(e)

Consultation

In developing consumer financial products under this section, the Under Secretary shall consult with Federal banking regulators with expertise in depository institutions, Federal agencies with experience regulating financial products, and consumer and military service organizations with relevant financial expertise.(f)

Independent evaluation

(1)

In general

Not later than the date that is 2 years after the date of the enactment of this Act, and annually thereafter until the end of the pilot program, the Under Secretary shall contract for an independent evaluation of the pilot program carried out under this section. Such evaluation shall—(A)include the degree to which the pilot program succeeded in the goals of increasing usage of savings products, programs, and tools among members of the Armed Forces on active duty; and(B)be conducted by a contractor with knowledge of consumer financial products and experience in the evaluation of such products.(2)

Report

After each evaluation carried out pursuant to paragraph (1), the Under Secretary shall submit to the Committees on Armed Services and Banking, Housing, and Urban Affairs of the Senate and the Committees on Armed Services and Financial Services of the House of Representatives a report containing all findings and conclusions made by the contractor in conducting the evaluation.(g)

Expansion of pilot program

Notwithstanding subsection (a), the Under Secretary may expand the pilot program, including extending the duration of the program and expanding the program to make it a nationwide program, to the extent determined appropriate by the Under Secretary, if the Under Secretary determines that such expansion is expected to—(1)improve the rates of savings among members of the Armed Forces and their families; or(2)decrease the need for members of the Armed Forces and their families to rely on payday lenders without exacerbating credit overextension.(h)

Financial institution defined

In this section, the term financial institution means an insured depository institution (as defined in section 3(c)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)(2))) or a credit union.