Defense

July 24, 2015
 

Final rule puts more teeth into Military Lending Act

Terri Moon Cronk
DoD News, Defense Media Activity
Lending_pict1

WASHINGTON – The Defense Department today closed loopholes to protect U.S. men and women in uniform from predatory lending practices, President Barack Obama said this morning at the 116th Veterans of Foreign Wars National Convention in Pittsburgh, Pennsylvania.

The heightened level of financial and consumer-rights protection against unscrupulous practices, called the final rule of the Military Lending Act, covers all forms of payday loans, vehicle title loans, refund anticipation loans, deposit advance loans, installment loans, unsecured open-end lines of credit and credit cards, DoD officials explained.

“We’re going to keep fighting to give our troops and veterans a chance to enjoy the American freedom you helped defend,” the president told the veterans.

“There’s already a lot to protect our troops and families against unscrupulous predatory lenders, but some of the worst abusers — like payday lenders — are exploiting loopholes to trap our troops in a vicious cycle of crushing debt,” Obama said.

“It is the right thing to do,” he said of the new rule.

“With this action, the department takes an important stand against companies that can prey on our men and women in uniform,” Deputy Defense Secretary Bob Work said in a news release after the president’s announcement.

“This new rule addresses a range of credit products that previously escaped the scope of the regulation, compromising the financial readiness of our troops. Today, with our regulatory and enforcement partners, we stand united in support of our service members and their families,” he continued.

The revision began with a three-year study by the Defense and Treasury departments, Federal Trade Commission, and financial regulators such as the Federal Deposit Insurance Corp., Federal Reserve Board, Office of the Comptroller of the Currency, Consumer Financial Protection Bureau and the National Credit Union Administration, DoD officials said.

Congress passed the Military Lending Act in 2006 to provide specific protections for active-duty service members and their families in consumer credit transactions.

Among other protections, the law caps at 36 percent the interest rate on covered loans to active-duty service members, requires disclosures to alert service members of their rights, and prohibits creditors from requiring a service member to submit to arbitration in a dispute.

The latest rule allows for industry compliance by Oct. 1, followed by a staggered implementation period, DoD officials said.

The rule will help protect all active-duty service members and their families from committing to loans with excessive fees and charges.

Service members still will have access to no-interest loans, grants, and scholarships from the four military relief societies, and not all credit products will be affected by the regulation — notably residential mortgages and purchase-money loans to buy cars, for example, which are excluded from the MLA’s definition of consumer credit, officials said.




All of this week's top headlines to your email every Friday.


 
 

 

Boeing, Cathay Pacific to donate world’s 1st 777 to Aviation Museum

Boeing and Cathay Pacific announced today that they are donating the first-ever Boeing 777 airplane to the Pima Air & Space Museum in Arizona, one of the world’s largest facilities devoted to celebrating aerospace. The iconic airplane (line number WA001 and registered B-HNL) flew from Cathay Pacific’s home airport in Hong Kong to Tucson, Arizona...
 
 
Air National Guard photograph by Staff Sgt. George Keck

Arizona Air National Guard’s first deployment in 31 years

Air National Guard photograph by Staff Sgt. George Keck Staff Sgt. Luke Arandules, a 195th Aircraft Maintenance Unit crew chief, Arizona Air National Guard, performs a final inspection for debris around the intake of an F-16 Fi...
 
 
Air Force photograph by Airman 1st Class Michael X. Beyer

AF spouses learn valuable resiliency skills

Air Force photograph by Airman 1st Class Michael X. Beyer Military spouses attend a resiliency class at Davis-Monthan Air Force Base, Ariz., Sept. 7, 2018. The class focused on providing tools to spouces to help deal with the c...