Reed: Strengthening Military Lending Act Will Offer Better Financial Protections for Those Who Protect Our Nation
Pentagon issues enhanced MLA rules that seek balance between protecting service members and ensuring access to credit
WASHINGTON, DC – Today, the U.S. Department of Defense (DOD) announced finalized rules aimed at updating and improving the Military Lending Act (MLA) to provide new loan protections for U.S. troops and their families. The new rules are needed to close various loopholes that predatory lenders have used to target, exploit, and overcharge service members.
U.S. Senator Jack Reed (D-RI), the Ranking Member of the Senate Armed Services Committee, who also serves as a senior member of the Banking Committee, helped pass the original MLA in 2006 to protect military families from predatory lending and led Congressional efforts to extend better protections to a broader range of consumer financial services, including credit cards and payday loans, stated:
“This is a significant win for our troops and their families. Predatory lending is a threat to military readiness and therefore our national security, and frankly these commonsense protections are long overdue. The MLA was designed to enhance financial protections for military families and updating the rules and closing these loopholes will help make it more effective and ensure lenders don’t put an unfair financial strain on our troops and their loved ones.”
In addition to writing language in the FY2013 National Defense Authorization Act (NDAA) requiring the Pentagon to study the effectiveness of the MLA, which contributed to the current proposed rule-making process, and authorizing all federal agencies responsible for federal credit laws to use their civil enforcement capabilities to enforce the 36% interest rate cap required by the MLA, Senator Reed also wrote the law creating the Office of Servicemember Affairs within the Consumer Financial Protection Bureau (CFPB) to serve as a watchdog for military personnel. This office educates and empowers service members and their families to make better-informed decisions regarding consumer financial products and services.
In an effort to further protect members of the military and their families from abusive financial practices, Reed recently introduced the Military Consumer Protection Act (S. 1565). This legislation would empower the CFPB to oversee and enforce compliance with certain existing provisions of the Servicemember Civil Relief Act (SCRA).
“Predatory lending, unfortunately, continues to evolve, and we need to strengthen our consumer protections to keep up. Plugging these MLA loopholes is an important step toward protecting our service members and their families. It sends unscrupulous lenders a clear message: we will not allow our troops to be exploited, especially while they are fighting to protect us, and we are cracking down on abusive practices in order to preserve our military readiness,” concluded Reed.