A Win for the Good Guys!
The Talent-Nelson bill to limit interest rates on lending to soldiers to 36% just passed the House-Senate Conference. When the House and Senate come back to vote on the Defense Authorization bill, the cap will be in there—and there can be no more amendments. The only choices are to vote yes or no.
Mark this day on your calendar: We’ve been talking about it here on Warren Reports for months. Congress finally said, at least in this limited circumstance, “Enough is enough.” Lenders cannot prey on military families with tricky credit instruments that can result in interest rates in the 400% range. Credit issuers everywhere—from payday lenders to credit card companies to home mortgage issuers—felt a slight disturbance in the force.
The consumer groups and military support groups worked hard, so there is plenty of credit to spread around. Even so, the Center for Responsible Lending deserves extra special credit for pulling together data and pushing on this issue for a very long time. Their hard work really paid off.
It has been a long time since I've had the chance to celebrate some pro-middle-class legislation. I’m ready to raise a glass!
Comments (5)
On the one hand, I appreciate the win and congratulations to everyone who helped pull this off.
On the other hand, I have to admit that when I first read the first paragraph of this post, I thought "36% - wow, that's insanely high". I realize that a lot of these are short term loans, but its still insanity, and I'm talking about the 36%, not the 400%. I don't even know where you'd go to get a 400% loan.
As someone who was recently a student forever, I have a lot of debt (hey, don't we all). Most of it is at 2.5% APR or so, and the rest is at 5% or maybe a little bit at 10%. Even if I didn't pay one of my higher interest credit cards and was subject to the full possible APR, I don't think I have a card where the rate is above 25%, and to me even that's insane. Also, my credit score is pretty much shot because of an old bill I'm in endless dispute over, so its not like I have great credit.
It seems to me that for someone in the military, where they know where to find you, and you have some job security, and known wages, should be able to get good credit pretty easily. If not, I'm surprised the military hasn't set up something like the ol' Hebrew Free Loan Society where one person who was a bit short one month could go and get a short term loan for free.
Very odd that our grad students get treated better than our military.
October 4, 2006 12:55 PM | Reply | Permalink
Reread what I wrote, and I'm leaving it up, but I wanted to say sorry for being such a downer...
October 4, 2006 12:56 PM | Reply | Permalink
From Elizabeth's earlier post:
According to the Center for Responsible Lending, one in five active-duty military personnel were payday borrowers last year.
Wow.
And also:
the payday lending industry has grown into a multi-billion dollar enterprise by lending money at rates that routinely reach 800%--or higher.
Wow again. I always figured those "Need Cash Now?" things were predatory, but I didn't realize how predatory. Yeesh.
October 4, 2006 1:15 PM | Reply | Permalink
I'm in the wrong line of work....
October 11, 2006 12:16 PM | Reply | Permalink
Any different from Organized Crime from years ago? Even they didn't charge that high even though their computation was dubious. These parasites are just up front and couldn't care less. Greed is a powerful motivator. Just ask "Duke." Our DOD in allowing this to stand is complicit in ruining the lives of many of our troops. Especially Guard and Reserve. They probably have more debt than the new young troops and are removed from their regular jobs and put in a situatioin where their military pay is a small fraction of their regular pay. What is next? Borrow from Peter to Pay Paul? It will be wonderful to hear from the lenders that they should be more financially prudent while all the while enticing and tempting them just to get them hooked for life. The DOD should be trying to enact through the Congress laws to PROTECT our troops. With body armor, up-armored vehicles and include eliminating predatory lenders. Instead they are in bed with them. Jesus Christ
April 18, 2007 8:48 AM | Reply | Permalink