Topics in this Week's News Include:
Here's the News!!
1. NMFA Supports Curbs on Predatory Lenders in Virginia: Organizations concerned about the lending practices of payday loan businesses operating in Virginia verbally sparred with industry supporters last week at a hearing of the Commerce and Labor Committee of the Virginia House of Delegates. Members of the Committee looked for ways to understand the effects of the industry on state residents and the patterns of use by Virginians who seek short term loans from these establishments. NMFA Government Relations Director Joyce Raezer testified in favor of curbing payday lending practices in the state. She joined representatives of several organizations, including the NAACP, AARP, the Center for Responsible Lending, the Consumer Federation of America, and the Virginia Joint Leadership Council of Veterans Service Organizations, in urging legislators to provide more protections for state consumers, especially military families.
The hearing was in preparation for the next General Assembly session, which will feature legislation to tighten controls on payday lenders. Since 2002, when lawmakers decided to regulate the industry, Virginia payday loan shops have doubled, now numbering 756. Virginia law exempts payday lenders from the 36 percent annual interest cap that governs other Virginia lenders. As a result, payday lenders may charge 391 percent annual interest for their loans. When a person takes out a payday loan in Virginia, they write a check in the loan's amount to the lender plus $15 for each $100 borrowed-$575, for example, for a two-week $500 loan. On the borrower's next payday, the loan company can cash the check to recover the loan principal and fees.
In her testimony, Joyce Raezer summarized key elements of the recent DoD report on predatory lending practices (http://www.usa4militaryfamilies.dod.mil/dav/lsn/LSN/BINARY_RESOURCE/BINARY_CONTENT/2141721.pdf). She stated NMFA's agreement with the concerns raised in the report about the negative effects on military families when they become caught up in a cycle of debt through their use of payday lenders. She noted that DoD's considerable financial literacy education efforts are making a difference, but stated this training and outreach to families must intensify. She also praised efforts by banks and credit unions to make more short-term loans available, but stated the industry must do more to make alternatives to payday lenders available. She also answered Committee members' questions about the provision included in the FY 2007 National Defense Authorization Act (NDAA), which would limit the interest rate on all credit provided to service members and their families to 36 percent. To view NMFA's statement, go to: http://www.nmfa.org/testimonies.
Representatives of the payday lending industry countered opponents by arguing that payday lending serves a consumer need, pointing out that 445,000 Virginians took out 3,372,000 separate payday loans last year. They asserted that many of these state residents would not have other alternatives for fast cash if payday lenders were driven from the state by more stringent regulations. They could not, however, document negative effects on potential borrowers in nearby states-North Carolina, Maryland, and West Virginia-that have either banned payday lenders or imposed lower rate caps. They rejected the efforts by Delegate John M. O'Bannon III (R-Henrico), who had unsuccessfully sponsored a bill at the behest of Henrico County government that would have placed payday loans back under the 36 percent annual interest cap. "We're dealing with a vulnerable population of people," said Delegate O'Bannom. "There's a legitimate place for government to be involved in protecting its citizens."
Committee members also had questions about the provision in the NDAA mandating a 36 percent rate cap for all loans to military members and their dependents. While payday lenders stated they would go out of business if limited to charging 36 percent, a representative of the Langley Federal Credit Union spoke of its program to provide short-term small loans carrying a maximum interest rate of 18 percent. While the loans are not a money maker for the credit union, he said, it does break even on them.
NMFA will continue to monitor this issue and will follow the progress of reform efforts in Virginia closely during next year's legislative session.
2. WIC Overseas Brings Many Benefits to Military Families Far From Home: The Women, Infants and Children (WIC) Overseas, a Department of Defense (DoD) special supplemental food program, provides several important benefits for pregnant or nursing women, infants, and young children. These benefits include:
- Education on nutrition and proper diet;
- Tips for preparing a balanced meal;
- Nutrition and health screening;
- Redeemable food coupons, called "drafts," for nutritious food; and
- Referrals to other health agencies.The WIC Overseas program was implemented several years ago in response to concerns from military families, family center personnel, military spouse clubs, medical personnel, chaplains, and NMFA, which noted that families who were eligible for the program in the United States lost access to the program when ordered overseas. The reason: WIC is funded by the U.S. Department of Agriculture (USDA), but administered by the individual states. More than one-half of all the infants born in the United States are eligible for WIC based on income. Given the demographics of today's military-young families-it is not surprising that many military families are eligible to receive the benefits provided by WIC. In many states, even more military families are eligible for the program because their Basic Allowance for Housing (BAH) is not counted as income.
After several years of unsuccessful efforts to persuade DoD and USDA to work together to make sure military families overseas had access to WIC, its food vouchers, and nutritional counseling, Congress finally ordered DoD to create a WIC Overseas program in 2000. The program is administered by the TRICARE Management Activity. NMFA was instrumental in obtaining the legislation mandating the program and in speeding its implementation.
Members of the armed forces, civilian employees of a military department, contractors for DoD living overseas, and their family members may be eligible to participate in the WIC Overseas program. To receive benefits under this program, the military member and/or family members must first be certified at nutritional risk for medical or dietary reasons. Then they must meet the program's income guidelines published by the Departments of Health and Human Services, which are used by USDA for its safety net programs. The WIC Overseas Program uses the income poverty table for the State of Alaska when determining income eligibility. To view the income guidelines, go to: http://www.fns.usda.gov/wic/howtoapply/incomeguidelines.htm. Once eligibility is established for pregnant women, they will receive WIC services throughout their pregnancy and up to six weeks after they deliver, or if they pregnancy ends. If they are breastfeeding, they can continue to use the program until the infant's first birthday. Mothers who are not breastfeeding can continue in the program for up to six months after the child's birth. Eligible children may participate up to the age of five.Once a family is approved to participate in the program, they will meet with a nutrition counselor who will give them approved food lists specifying type, brand and quantity of foods they may purchase using food drafts for specified foods and quantities that may only be redeemed at overseas commissaries and NEXMARTs. The following food items are generally available through the WIC Overseas program:
- Iron-fortified infant formula and infant cereal
- Iron-fortified adult cereal
- Vitamin C-rich fruit and/or vegetable juice
- Peanut butter
- Dried beans or peas
- Canned tuna
- Vitamin A-rich vegetablesThe WIC Overseas program offices are located in Germany, England, Belgium, Netherlands, Italy, Spain, Japan, Korea, Turkey, Portugal, and Central America. Families can check with their local installation telephone operator to obtain the WIC Overseas office listing in their area or see "Site Locations" on the WIC website: www.tricare.osd.mil/Wic/.
3. President Signs Bill Adding Financial Protections for Military Families: On September 29, President George W. Bush signed into law the Military Personnel Financial Services Protection Act (S.418). The law shields military personnel from abusive sale practices, bans the sales of inferior investment products, and ensures regulatory oversight of financial services sales on military installations. The new law, sponsored in Congress by Representative Geoff Davis (R-KY, 4th), Senator Michael Enzi (R-WY) and Senator Hilary Clinton (D-NY), is intended to help protect service members from companies selling risky financial products, including expensive and unnecessary life insurance, as well as mutual funds with excessive fees.
- The law originated as H.R. 458 and was overwhelmingly approved in the House of Representatives before being modified by the Senate and approved again by the House as S. 418. Provisions included in the Military Personnel Financial Services Protection Act will:
- Ban the sales of contractual plans,
- Require disclosures before the sale of private life insurance to military personnel,
- Require military personnel be informed of life insurance available through the federal government before the sale of private life insurance,
- Clarify state jurisdiction for insurance sales on military bases located within their borders, as well as military installations overseas,
- Establish a list of barred brokers and agents to be made available to installation commanders and state and federal financial regulators, and
- Provide investors with online access to information, including disciplinary actions, regarding broker-dealers.
NMFA congratulates the Congressional sponsors of this legislation.
4. Free SAT/ACT Offer Extended: After receiving tens of thousands of letters of thanks from service members world-wide, a group of NFL, NFL Europe, AFL, and CFL football players have announced they are extending and enhancing their sponsorship of $200 SAT/ACT training to all military families. The sponsorship allows any military person (active, National Guard, Reserve, or retired) to request as many programs as they need for the students in their lives. The Department of Defense has created a secure website to confirm a person's military status before directing the user to the software order site. Instructions for ordering the software are available at: http://www.militaryhomefront.dod.mil/portal/page/itc/MHF/MHF_DETAIL_0?current_id=188.8.131.52.0.0.0.0.0. Personnel can also access the confirmation and request pages through several military related associations and organizations, including the education page of the NMFA website: http://www.nmfa.org/site/PageServer?pagename=home_education. Programs ship to domestic U.S. addresses and APO addresses. The sponsorship covers the regular purchase price of $199 and the family pays only the shipping and handling of $9.95. The programs have a one-year license and are intended for the individual use on students' personal home or laptop computer and are not intended for group or classroom instruction through the schools.
The SAT & ACT test prep training programs come in either a single DVD or two CD-ROM sets and include more than eleven (11) hours of training video and 25-40 hours of student participation. They can be used as a stand-alone complete course or as a supplement to other SAT & ACT prep materials. The students select the training they most need and can study at their own pace by picking which of the 120 video lessons they want to view. The program also provides progress tracking and much more. To view a flyer that has been made to assist in the effort, go to: http://sat.eknowledge.com/military.asp.
5. Is Military OneSource Your One Source for Information and Support? Have you used Military OneSource lately? Do you have access to a similar program through your employer? Do these programs meet your needs as a military family? Please complete NMFA's new Military OneSource/EAP survey (www.nmfa.org/onesource) and tell us what you think!