Standing with the troops requires more than hype. It also requires action.
When the Pentagon discovered that predatory payday loan shops and unethical car dealerships were trolling military bases and aggressively targeting troops with interest rates of 300% and above, the Pentagon urged Congress to to act. And they took action, because those who defend our nation deserve to be protected from predatory lenders. Congress joined our troops over a decade ago with the almost unanimous and largely bipartisan enactment of the Military Loans Act (MLA) to protect active duty members and their families from financial ruin.
However, unfolding before us now, the Acting Director of the Consumer Financial Protection Bureau (CFPB) Mick mulvaneyMick Mulvaney Headhunters Struggle to Find Jobs for Former Trump Officials: Reports Trump Remains Deny Social Security Benefits to Hard-Working Americans Mulvaney Calls Trump Comments on Capitol Riot “Manifestly false” MORE To pledged to end proactive monitoring payday lenders and other predatory lenders, accusing supervisors of his own agency of being “too aggressive.” This marginalization of crucial protections for our troops will reinvigorate exposure to predatory practices.
A single high-interest payday loan can have a cascading effect – ultimately depriving a military member of the opportunity to own a home, buy a car, or even support their family. For example, a military person may borrow $ 800 for a broken refrigerator and find that the debt quickly turns into thousands of dollars. Like quicksand, these loans are easy to insert but almost impossible to escape.
The MP’s protections include guidelines for bank and non-bank lenders. Among them, lenders cannot charge service members an interest rate greater than 36%, cannot push them into forced arbitration, and cannot charge a prepayment penalty.
Previously, using its power to monitor risks for consumers, the CFPB carried out periodic and proactive audits of lenders to ensure compliance with the AMLA; monitoring worked as expected. Since its creation in 2011, the CFPB has delivered more than $ 130 million in relief military personnel and handled over 72,000 consumer complaints from military personnel and their families. In the past, the office had a strong track record in To take part to protect consumers, including military personnel and their families.
But Mr. Mulvaney would cancel that. Under its proposed changes, the CFPB would rely on complaints from service members to identify violations of the law. This is unrealistic, given the demands placed on troops to focus on their mission. Eliminating proactive surveillance will put our armed forces back in the crosshairs – risking preparation, damaging morale, and adding unnecessary financial burdens to our all-volunteer force.
The impact is not just on military personnel and their families. When military personnel are in financial difficulty, they can lose their security clearance and their eligibility to serve. And the damage goes further. The Pentagon estimates it loses over $ 57,000 in recruiting and training costs for each involuntary departure of a member. And, each year, up to 7,957 military personnel are involuntarily separated when financial distress is a contributing factor. Overall, the Department of Defense (DOD) believes the MLA saves him up to $ 133 million annually.
Congress has made great strides in crafting a bipartite, bicameral military loan law, enacted to provide much-needed protections. The weakening of these protections will lead to problematic exponential results, exacerbating an already limited military recruitment and retention environment.
Thanking the troops for their service goes beyond empty expressions of gratitude. It requires taking steps to support the troops when predatory lenders lag behind, to ensure that they are not plunged into a life of debt and bad credit. As a united front, we strongly oppose any attempt to weaken the law on military loans.
We were proud to join with other veterans and military service organizations in a full page ad that ran this month in numerous newspapers nationwide, sharing our concerns and calling on our federal leaders to preserve military protections. Join us by adding your name on KeepMilitaryProtections.org.
Joyce Wessel Raezer is Executive Director of the National Association of Military Families. Retired Air Force Lieutenant General Dana T. Atkins is President and CEO of the Association of Military Officers of America.