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Congress Protects Military from Predatory Lenders

Friday, September 29, 2006

At a time when America's service men and women are making sacrifices for all of us, the least the rest of us can do is try to put them out of financial harm's way.

That is why I am tremendously pleased that a joint House-Senate conference committee today approved a bill that would cap payday loans to soldiers, sailors and aviators at 36 percent. That is the same amount many states impose as the maximum in their usury laws to prohibit loan-sharking.

These lenders, whose shops cluster around military bases preying on young and financially unsophisticated soldiers, make borrowers sign a postdated check including fees. When full payment is due at the next payday, usually in two weeks, the borrowers can seldom repay the entire amount and must roll the loan over again, racking up still more fees – the industry's goal. That amounts to an annual percentage rate of more than 400 percent. The average borrower pays back more than $800 for a typical loan of about $340.

The Department of Defense issued a report recently saying these loans were hurting military preparedness and the country's ability to protect itself. The report endorsed a cap of 36 percent, and the Pentagon's courage and persistence in standing up to these predatory lenders – and their ubiquitous and powerful lobbyists on Capitol Hill – are in the highest tradition of the military.

Today our military, and the veterans and consumer and civil rights groups that stood up with it, have won a tremendous victory. Let there be no mistake: Senators Jim Talent, a Missouri Republican, and Bill Nelson, a Florida Democrat, with their amendment have protected thousands of service members and their families from financial catastrophe and misery – the people who have the most important job in our country: keeping us safe every day.

So let us take a little time today and celebrate this victory against the predatory lenders. And then let's get back to work and extend these protections to all of America's working families."

For more information: Kathleen Day at(202) 349-1871 or kathleen.day@responsiblelending.org; Sharon Reuss at (919) 313-8527 or sharon.reuss@responsiblelending.org; or Ginna Green at (510) 379-5513 or ginna.green@responsiblelending.org.