Six military and veterans advocacy groups have asked the federal government to increase its oversight of lenders who work with military service members to ensure they don't prey on unsuspecting or needy consumers.
In a May 15 press conference in Washington, D.C., the organizations said the Consumer Financial Protection Bureau, or CFPB, should resume examinations of payday lenders and others to make sure they are complying with the Military Lending Act, or MLA.
By law, lenders may not charge more than a 36 percent annual rate on consumer loans to active-duty troops and their family members. The 2006 law sought to protect troops from predatory lenders who set up shop near military bases, sometimes charging 120% to 300% interest on short-term loans.
CFPB, established in 2011, is responsible for ensuring that lenders and others comply with lending laws. But in October 2018, it halted its compliance inspections of financial companies that deal with military personnel, saying the bureau does not have statutory authority to enforce the law.
Organizations such as the Veterans of Foreign Wars, National Military Family Association, American Legion, Military Officers Association of America (MOAA), Iraq and Afghanistan Veterans of America and Veterans Education Success said the oversight is necessary to ensure that lenders continue to comply with MLA.
"We urge Congress to ensure CFPB continues to provide the necessary supervision to regular MLA compliance," said Cory Titus, a former Army officer who now serves as association director of currently serving and retired affairs at MOAA. "A strong, enforced MLA keeps those in uniform focused on their mission of protecting our nation, not distracted by financial complications originating from unethical business practices."
Since 2011, service members have filed 74,000 complaints to the CFPB, resulting in more than $130 million being returned to affected service members, according to MOAA.
Members of Congress would also like to see the CFPB resume exams to ensure MLA compliance and have introduced several bills to ensure that the bureau has the explicit authority to do so.
Reps. Maxine Waters, D-California, and Andy Barr, R-Kentucky, have introduced separate bills that would extend the CFPB's authority to conduct these supervisory exams.
Waters' bill would go further than MLA enforcement; it would require CFPB to establish an office to ensure that students and families are empowered to make informed decisions about college and student debt, would reinstate some of the powers of the Office of Fair Lending and Equal Opportunity and place limits on political appointees at CFPB.
Last year, representatives from 38 military and veterans service organizations sent a letter to then-CFPB acting director Mick Mulvaney and then-Defense Secretary Jim Mattis urging support for continued MLA supervision. They argued that predatory lending not only hurts military personnel and families, it affects readiness.
Quoting the Defense Department, they noted, "The anticipated benefit of [the MLA's 36% interest rate cap] are savings attributable to lower recruiting and training expenses associated with the reduction in involuntary separation of service members where financial distress is a contributing factor."
-- Patricia Kime can be reached at Patricia.Kime@Military.com. Follow her on Twitter at @patriciakime.
