Military Personnel and Their Families Need Protection From Loan Sharks
It is hard to believe that predatory lenders are still taking advantage of military personnel and their families. As many as one in five members of the armed services are being victimized by loan centers set up near military bases. These loan sharks can charge cash strapped military family’s interest of 400% or more, according to a new Pentagon report. That's a most disturbing bit of news, and it should get the attention of Congress. Steep lending charges have long been a problem for members of our armed services. The problem has now become a major problem for the military. That's because debt troubles can keep troops from going overseas. Security clearances become a problem for persons in the military who get into deep debt. The Pentagon report says "payday loan" outlets have sprung up by the "thousands around military bases" and elsewhere in the past decade.
Payday lenders typically charge $15 to $25 per $100 loan for two weeks. Most of the loans are extended for several weeks. In fact, many borrowers are soon trapped by the weight of their debt. The report says the average loan is $350 and has an annual interest rate of 390% to 780%. The average borrower pays back $834 for a $339 loan. It is estimated that 13% to 19% of service members (at least 175,000 individuals) took out high interest, short term loans last year. The report said nine out of 10 loans go to borrowers who take out five or more over a year. Congress ordered the Pentagon to conduct the lending study. This year, the Senate passed an amendment to its annual defense spending bill that calls for a 36% cap on interest for loans to service members. Unfortunately, the House version of the defense bill does not include the amendment. A joint committee will have to work out differences between the two versions. Given that the victims of payday lenders do not have highly paid lobbyists working for them in Washington, there are serious doubts that any real debt relief dealing with the issue will ever be approved. The Community Financial Services Association of America, the payday lenders' trade group, is actively opposing any caps on the interest rates allowed.
Although the payday lenders claim that the industry does not target military
personnel, the Pentagon report says those outlets "are heavily concentrated
around military bases." Such lenders were found in heavy numbers
around Camp Pendleton, California; Fort Campbell, Kentucky; naval installations
at Newport News and Norfolk, Virginia; and McChord Air Force Base and Fort
Lewis in Washington. They are also found around Ft. Benning in Georgia
and Fort Rucker in Alabama. Why won=t the Bush White House get involved
in this fight to stop the payday loan sharks from preying on our servicemen
and women? It is apparently fine to send our troops to Iraq, but when
it comes to protecting them and their families back home, the Bush Administration
seems to be taking the "ostrich approach" on the payday loan crisis.
