Trump and GOP put high-interest lenders ahead of military
resident Trump is not to be outdone when it comes to expressing support for the military. His March 13 tweet is typical of his effusive devotion:
“We support you, we thank you, we love you — and we will always have your back!”
Well, maybe not always.
If it’s a choice between aiding members of the armed services or the predatory lenders who congregate around military bases, the Trump administration is siding with the lenders by proposing to weaken oversight of the Military Lending Act. The law, signed by President George W. Bush in 2006, caps interest rates at 36 percent and provides other consumer safeguards.
Meanwhile, Republican U.S. Rep Patrick McHenry of North Carolina, the vice chairman of the House Financial Services Committee, has pushed a bill through the House that also would raise the risk of servicemembers being fleeced, along with civilians who have to turn to short-term loans. His bill could also jeopardize North Carolina’s ban on payday lenders and override state caps on loan interest. McHenry, who represent North Carolina’s 10th District, has received $156,000 in contributions from payday lenders, the 11th highest total in Congress.
Active duty servicemembers, often young with little savings and a limited or poor credit history, are inviting targets for short-term lenders who use high interest and fees to snare borrowers in to debt traps. North Carolina is home to an estimated 96,000 active duty military personnel, the third highest concentration in the nation.
Mick Mulvaney, the interim head of the Consumer Financial Protection Bureau, is proposing that his agency end its spot checks on short-term lenders to make sure they are complying with the Military Lending Act, The New York Times reported. Instead, Mulvaney would leave it to servicemembers to report abuses, an unlikely protection since most borrowers don’t know the the law’s requirements.
As a Republican congressman from South Carolina, Mulvaney accepted $60,000 in campaign contributions from the payday lending industry. In January, his agency dropped an investigation into World Acceptance Corporation, a leading small-loan finance company and a former contributor to Mulvaney.
Sen. Jack Reed, a Rhode Island Democrat and Ranking Member of the Armed Services Committee, trained as a paratrooper and served as a company commander at North Carolina’s Fort Bragg. He told NPR, that easing the oversight of lenders will expose servicemembers to predatory lenders.
“It’s just sort of cutting loose these men and women in uniform saying go out there and defend this country, but when it comes to your financial well-being at home, you’re on your own,” he said.
Every Senate Democrat has signed a letter urging Mulvaney to continue the spot checks on payday lenders.
Meanwhile, North Carolina Attorney General Josh Stein has joined 19 other Democratic and Republican attorneys general in signing a June 28 letter to U.S. Senate leaders asking them to oppose McHenry’s bill, the “Protecting Consumers’ Access to Credit Act of 2017,” and another, the “Modernizing Credit Opportunities Act.” Both bills could open the door to unscrupulous lenders.
“North Carolina ran the payday lenders out of our state for violating our laws and hurting our people,” Stein said in a statement. “It is my job to protect North Carolina consumers – and so I urge our leaders in Washington to reject any legislation that would let these corporate loan sharks back in our state.”
Servicemembers or other consumers who have complaints about any type of loan can seek help from the state attorney general’s office by visiting ncdoj.gov/complaints or calling 1-877-5-NOSCAM.
Barnett: nbarnett@newsobserver.com or 919-829-4512.