Last year, the Department of Defense took steps to protect the members of our military from legalized loan sharking. They proposed new rules to combat the targeting of veterans by payday lenders. But now, the latest version of the National Defense Reauthorization Act includes a built-in delay for these new protections. It seems that Congress’ Armed Services Committee may let payday lenders screw the military after all.
Ed Mierzwinski of US PIRG wrote for the Huffington Post:
The 2007 Military Lending Act capped payday and other loan rates to military families at 36% APR. But lenders re-designed their loans to evade the caps. Predatory lending continued. In 2014, the Department of Defense proposed a comprehensive new rule designed to capture all forms of predatory lending and ban certain practices
The Army Times reported that Defense officials say these new rules are almost done. But now Congress is trying to slow the new protections down:
[L]awmakers want to delay the process. They’re asking for another report on the rule-making, due by March 1, 2016, and further direct that the final rule can’t take effect until 60 days after that report is submitted to Congress.
The requirement is the work of the House Armed Services Committee’s military personnel panel, which inserted the requirement into the committee’s version of the fiscal 2016 defense authorization bill. The full committee is scheduled to consider the bill on Wednesday.
Two members of the United States Senate called on the Armed Services Committee to prevent delays to these new protections — Senator Jack Reed (D-RI) and Senator Sherrod Brown (D-OH):
— Senator Jack Reed (@SenJackReed) April 28, 2015
And Senator Sherrod Brown, ranking member of the Senate Banking, Housing, and Urban Affairs Committee, released this statement on April 29th:
“We should never put the interests of payday lenders ahead of the well-being of our men and women in uniform. This is a blatant attempt to stall a sensible proposal that will help protect servicemembers and their families from predatory lenders. DOD’s rule is designed to crack down on abusive and deceptive lending practices that target military families and often trap them in a continuing cycle of spiraling debt.”
Perhaps it’s no surprise that the payday lending industry is getting what it wants. After all, it has powerful lobbyists and is even able to buy off its former critics:
Former Congressman Walter Minnick of Idaho once told the radio show This American Life that he found the payday lending industry “a little unsavory” and that he was a bit uncomfortable with them, even as he resorted to accepting their contributions for his political campaign.
But it seems the payday industry has been able to not only buy Minnick’s silence, they’ve bought his endorsement: Minnick now lobbies on behalf of the Online Lender’s Alliance, and his firm made $200,000 doing so in 2014.
Tomorrow, April 28th, the House Armed Services Committee will hold a markup on the National Defense Reauthorization Act. Will they strip out this gift to the payday lenders (the action text is: Section 594—Report on Rulemaking under the Military Lending Act), or will they cave to the industry?
Let’s hope Congress does the right thing. If they don’t, the payday lending industry will continue to prey on our servicemembers. As Marine Major General Mike Lehnert told a San Diego community group in 2006:
“Pay Day Lenders are the parasites found outside of our military bases in Southern California who prey on young Marines and Sailors because the lenders know they are uninformed consumers.”
If you’d like to tell the Armed Services Committee to protect our military from payday lenders, you can click here to tweet the following at members of the Committee: