Vets Groups Urge Mattis to Keep Pressure on Payday Lenders

A payday lender near Camp Pendleton in California. (Marine Corps photo)
A payday lender near Camp Pendleton in California. (Marine Corps photo)

Nearly 40 veterans and military family organizations have joined in a letter to Defense Secretary Jim Mattis and White House Office of Management and Budget Director Mick Mulvaney urging them to keep in place oversight of payday lenders under the Military Lending Act of 2006.

The effort, led by the Veterans Education Success non-profit advocacy group, includes a $250,000 campaign to publish the letter to Mattis and Mulvaney, who also is acting head of the Consumer Financial Protection Bureau (CFPB), in full-page ads in the Washington Post, the Los Angeles Times and other newspapers.

VES claims that Mulvaney planned to have CFPB roll back "crucial protections for our troops, leaving them exposed and vulnerable to payday loan companies and other abusive practices."

In a similar letter last month to Mulvaney, all 47 Democrats in the Senate and the two Independents who vote with them charged that the CFPB plan would eliminate routine and random examinations of firms for compliance with the Military Lending Act.

The senators said that a two-page draft of the proposed changes for CFPB would "scrap the use of so-called supervisory examinations of lenders" on the basis that "proactive oversight is not explicitly laid out" in the Military Lending Act.

With the changes, the CFPB would conduct an examination of a payday lender, bank or credit card company only if there was a series of complaints from service members, the senators said.

One of the key provisions of the Military Lending Act limited interest rates to 36 percent in an effort to keep service members from getting enmeshed in a system of escalating rates and fees on loans. In predatory lending strategies, these interest rates and fees begin as short-term arrangements and can surpass 400 percent in some cases.

The letter to Mattis and Mulvaney stated that "servicemembers and their families suffer harm when predatory lenders target them with financial fraud and extremely high interest rates. As you know, maps of the location of payday lenders have shown they surround military bases and target the troops."

But, it continued, the harm these lenders cause is not limited to service members alone.

"The harm also extends to the Pentagon's costs and military readiness," the letter said.

Mike Saunders, legal advocacy director for VES, said in a phone interview that CFPB had to remain proactive in oversight to rein in predatory payday lenders.

"Putting payday lenders on their honor was how we got in trouble in the first place," he said.

In addition to VES, the nearly 40 groups signing the letter under the headline "Don't Abandon Military Families" included the Veterans of Foreign Wars, AMVETS, the Military Officers Association of America, the National Military Families Association, the Tragedy Assistance Program for Survivors, the Military Order of the Purple Heart, the Vietnam Veterans of America, the Iraq and Afghanistan Veterans of America and the Service Women's Action Network.

-- Richard Sisk can be reached at

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