Donnelly, Colleagues Urge CFPB to Uphold Financial Protections
WASHINGTON, D.C. – Today, Senator Donnelly and 48 other senators sent a letter to acting Consumer Financial Protection Bureau (CFPB) Director Mick Mulvaney, calling on the bureau to continue supervision of lending made to active duty servicemembers and their families to ensure that lenders are complying with the Military Lending Act (MLA). This letter follows recent reports that the Bureau is planning to suspend regular monitoring of payday lenders and other companies for violations of the act.
“The Indiana Assets and Opportunity Network commends Senator Donnelly and his fellow senators for their leadership in insisting servicemembers are protected from predatory lending practices,” said Kathleen Lara, Prosperity Indiana's Policy Director.
Lara added, “These loans cause a cycle of debt that destabilizes families and contributes to a lack of combat readiness, which is why it is particularly critical that men and women in uniform can depend on the CFPB to ensure lenders are complying with the law.”
The MLA was passed in 2006 with bipartisan support to offer vital consumer protections to active duty military servicemembers against predatory lenders. Payday lenders often locate their storefronts near military bases to market their high interest loans to servicemembers. Because the exorbitant annual percentage rates create a cycle of debt, the MLA caps the APR to servicemembers and their dependents at 36 percent.
Prepared prior to enactment of the MLA, a 2006 Department of Defense report to Congress found, "Predatory lending undermines military readiness, harms the morale of troops and their families, and adds to the cost of fielding an all-volunteer fighting force."
Since then, the CFPB has reported that their enforcement actions have yielded $130 million in relief for servicemembers, veterans and their families.
“Servicemembers and their families are vulnerable to predatory lending in ways the civilian population is not,” according to Amy Carter, the Indiana Institute for Working Family's Policy Analyst for Veterans Affairs.
Carter said, “The CFPB needs to be proactive in examining lenders and not rely on those already bearing the weight of national security to report financial abuse.”
“For years service members and their families were preyed upon by unsavory lenders. Commanders had to get involved to help their troops get out of the grips of these shysters. I remember when I commanded troops and I spent far too many hours dealing with these efforts instead of insuring my troops were trained and that my equipment was ready in very short notice. When Congress passed legislation and enforcement was put in place one could easily see the difference," said Brigadier General James L. Bauerle USA (Ret.).
He continued, "I recognize they intent to reduce government over-reach and recent events point out how government can abuse their power. However, this is an area where the proposed actions will most certainly impact our military readiness as it was before the current laws were put in place.”
This letter can be found here: https://www.donnelly.senate.gov/newsroom/press/donnelly-group-of-senators-urge-administration-not-to-abandon-financial-protections-for-servicemembers.
The Indiana Assets & Opportunity Network was created to increase asset acquisition for low-wealth Hoosiers and strengthen local economies through policy advocacy and capacity building in partnership with organizations and coalitions.
Follow us on Twitter: @IN_AO_NETWORK