The Trump administration wants to get rid of a decade-old Military Lending Act designed to protect service members from predatory lenders and other financial hucksters looking to swindle U.S. military personnel out of their hard-earned cash, according to internal documents obtained by both the New York Times and National Public Radio.
- The MLA was established in 2006 to protect active-duty service members and their spouses from predatory lending practices like exorbitant interest rates. According to the Federal Deposit Insurance Corporation, the act imposes “limitations on and requirements for certain types of consumer credit extended to active duty service members and their spouses, children, and certain other dependents.”
- As the New York Times reported on August 10, interim Consumer Financial Protection Bureau chief and dictator Mick Mulvaney, “intends to scrap the use of so-called supervisory examinations of lenders, arguing that such proactive oversight is not explicitly laid out in the legislation,” a move that would effectively prevent the CFPB from enforcing the MLA.
- However, those supervisory exams have proven essential in “uncovering previous instances of wrongdoing and led to several of its biggest fines,” according to the New York Times, which notes that in 2014, the CFPB “fined one of the largest payday lenders in the country, Ace Cash Express, $10 million after determining the company, based in Texas, steered low-income borrowers, including those in the military, into a succession of financially damaging high-interest loans.”
- University of Utah law professor and former CFBP staffer Christopher Peterson said in an interview with NPR that “if the White House does this, it will be manipulating the Military Lending Act regulations at the behest of auto dealers and banks to try and make it easier to sell overpriced rip-off products to military service members.”
- A Mulvaney spokesman told the New York Times that the rule change was part of a broader review of the agency’s regulations, stating that while the CFPB’s goal was “to protect service members…we also have to abide by the law.”
Ironically, Mulvaney stated during his April 2018 testimony to Congress that he and his staff were committed “to making sure the Bureau’s regulations work not only for those who use consumer financial products and services but also for those who provide them.” So at least one of those promises has been kept!