Rep. Tammy Duckworth, veteran, saves the day.
House Republicans were all set to
undo protections for service members from predatory lenders this week, at the behest of the banking lobby.
The military has been struggling with the financial impact of predatory lending on service members for years. A 2014 report issued by the Consumer Financial Protection Bureau documents a host of abuses targeting troops. One family that took out a $2,600 loan ended up paying back $3,966.84 over the course of a year. Another borrower spent $1,428.28 to pay off a $485 loan in just six months. Thousands of service members receive short-term, high-interest loans each year.
In 2006, Congress passed legislation imposing a 36 percent cap on interest rates for payday loans, auto title loans and tax refund anticipation loans to military families. Lenders responded by slightly tweaking the terms of their loans to avoid the limits. Since the law applied to payday loans with terms of 91 days or less, and amounts of $2,000 or less, credit companies were able to shirk the rules with 92-day loans, or loans of $2,001.
Big banks were even more creative, issuing "deposit advance products"—functionally almost identical to payday loans, but with a different name and with effective annual interest rates of around 300 percent. Congress responded to these tricks in 2012 by passing another law directing the Pentagon to fix these loopholes, and new rules were finalized in September of last year.
House Armed Services Committee Republicans put their proposal to postpone those rules in the National Defense Authorization Act, and it was the sharp eye and action on the part of Democrats on the panel—including Rep. Tammy Duckworth (D-IL)—that stopped it from happening. Duckworth offered an amendment in committee to strip the language from the bill, and it
very narrowly passed early Thursday morning. It's good to know that at least a few Republicans are capable of being shamed.
It's likely not the end of the banksters' efforts, though. There will almost certainly be another amendment offered on the floor to block these rules from protecting the troops when the bill comes up in a few weeks.