AP: Pentagon targets payday lenders

[Eugene]

Thursday, August 31, 2006 · Last updated 12:06 p.m. PT

Pentagon targets payday lenders

By THOMAS WATKINS
ASSOCIATED PRESS WRITER

Worried that too many members of the military are falling to victim
to ruinous interest rates and getting into deep financial trouble,
the Pentagon is backing an effort in Congress to slap a nationwide
cap of 36 percent on payday loans to troops. An increasing number
of states are taking steps, too.

In a report released August, the Defense Department estimated 225,000
service members - or 17 percent of the military - use payday loans.
The Center for Responsible Lending, a nonprofit group seeking stricter
industry controls, says that one in five service members took out such
a loan in 2004, and that someone who borrows $325 pays an average
of $800 in charges.

-snip-

"You are not doing a service to an individual who is already short on cash,
so he's living not just paycheck to paycheck, but from almost paycheck
to almost paycheck," said Capt. Mark D. Patton, the commanding officer
for Naval Base Point Loma in San Diego, where LaForce is stationed.

Patton said the Navy is worried that payday loans are contributing
to the surge in the number of sailors who cannot be sent into duty
overseas because of financial problems.

-snip-

Full article: http://seattlepi.nwsource.com/national/1110AP_Military_Payday_Loans.html

[marmar]

1. I'm glad, but...

shouldn't there be another division of the government going after payday lenders, and not just for military families?

[Radical Activist]

3. That's how it was meant to be

before corporations put their hired hand in the white house.

[Radical Activist]

2. This is just so wrong

1) Why aren't troops making enough to not use places like this.
2) Why can't the law apply to everyone, as it should?

Even when they almost do the right thing they have to be a-holes about it.

[Nikki Stone 1]

4. EXACTLY!

excellent points, both

[jmowreader]

7. Troops have never "made enough"

Here's what happens:

Joe Soldier comes to Fort Bragg or wherever fresh out of Fort Benning.

Suddenly he's inundated with offers of easy credit. Buy a car no money down no credit check E-1 and up. Buy furniture no money down no credit check. Buy all manner of luxuries no money down no credit check. Buy a house in the country no money down. And a lot of guys get as much credit as they possibly can.

Next thing you know, you got this 20-year-old kid with a wife and two kids bringing home $1100 a month, $950 of which goes toward bills. The house you can get with no money down is usually a used trailer, and it's usually 25 miles from post. The car they have is a worn-out SUV that gets 15mpg, and that they're paying $159 per month for. She works, she has to, but half her pay goes to childcare and the other half to gas. These guys are on food stamps, but that's never enough. They're living on $150 per month IF nothing breaks down and he doesn't lose a piece of field gear.

Twenty-four years ago when I first reported to Fort Campbell, the lenders were out there but they were nowhere near as predatory as they are now. There used to be a very good law called the Soldiers and Sailors Civil Relief Act, which was written during World War II. The idea was, two-thirds of the army is from Pigs' Knuckle, Arkansas, and they're not sophisticated about money. Therefore, protecting them from full-bore collection agencies would be a REAL good idea. Since you couldn't let these guys have it with both barrels the way you can a civilian, lenders were very cautious about loaning a lot of money to a soldier. The first thing I ever bought on credit was a motorcycle. I needed fifty percent down and full-coverage insurance paid up for the life of the loan. And that was exceptionally common.

Then the predatory-lending industry convinced Bush 41 that soldiers of today were financially knowledgeable enough that they didn't need all the protections of the now-Servicemembers Civil Relief Act, and it was defanged. The only problem with the predatory lenders' theory is that two-thirds of the army is still from Pigs' Knuckle, Arkansas. They get one hour's worth of Debt Management class in basic training and most of them sleep through it. Past that, the belief that your account has money in it because you've still got checks is far too prevalent in the military. And when the bank calls to tell them that they need to put $300 in before the end of the day? The payday lender is right there. Or worse: you can pawn the title to your car. You keep the car, but if you are late with a payment they take possession of your vehicle. Fuckers used to, before 9/11, go up on Bragg and tow cars right out of battalion parking lots while the soldiers were at work. No notice given; they just went up and got it.

The result? In the year 2006, there were at least ten insurance agencies (all have been closed by the Fort Bragg authorities) selling life insurance policies to soldiers that contained war clauses. A war clause is a line in a life insurance policy that allows the company to deny paying a claim if the policyholder died in combat. You may now scream :wtf: as it is appropriate. No one who knows Jack Schitt about life insurance would ever subscribe to such a policy even if he wasn't in the army. Soldiers--combat soldiers in the 82d Airborne Division, America's Guard of Oil Wells, who go to war in Iraq all the time--are buying these policies!

You know how we've all been saying the next Democratic president needs to reinstate the Fairness Doctrine? He needs to first reinstate the Servicemembers Civil Relief Act.

Oh yeah. Before I forget. The other obnoxious fucking industry that should be banned today is Rent-To-Own. Man, you can go to Aaron's or Rent-a-center and get yourself a big-screen 31-inch TV that sells for $499 at Best Buy for about $1200--$99 per month, own it in twelve months. That's what, 140 percent interest? They are good for cruel entertainment, though: go to one of those places, point at some object of desire that they're charging a brazillion percent interest on, and ask the guy, "how much would that be if I paid in full with cash?"

[shadowknows69]

5. Well pay our soldiers as well as you do Blackwater Mercs

and they probably won't have money problems.

[sui generis]

6. well why won't one of our enterprising research team here

correlate the decommissioning of usery laws to the republican administration? It's the credit card companies like Capital One that led the charge (and I know this from formerly inside the boardroom) - these pay day loan guys are just picking up the crumbs.

The real screwing started with changing the way and manner in which revolving loan interest rates could legally be calculated and removing caps; an entire comprehensive federal and state lobbying effort that is directly the result of having "friends" in high places in this administration who would rubber stamp legislation written by the industry.

[Cobalt-60]

8. Its a good start

But not nearly enough.
These payday loan people are low grade loan sharks with an address.
They're leeches need to be kept off the soldiery.
Let's set that interest limit much lower, first. 36 % is way over the top.
Loaning to a service man is sure thing. Uncle Sam loves to garnish wages and its a crime to quit the job ahead of schedule. So there's just no excuse for a ruinous rate.
I'd consider someone blood sucking soldier sailors and airmen at 36 % to be well over the line into disloyalty.

[Neecy]

9. well....

John Edwards was talking about this very subject more than three years ago. Nice to see the Pentagon is just now finding this a concern.