U.S. Sen. Bill Nelson (D-Fla.) today called on the Consumer Financial Protection Bureau (CFPB) to continue taking the steps necessary to protect U.S. service members from predatory lenders, instead of turning a blind eye.
“It is just mind boggling that the Consumer Financial Protection Bureau that is set up for the purpose of protecting consumers would now turn a blind eye to protecting some of the most vulnerable, who almost everybody in America would say we want to protect,” Nelson said on the Senate floor Wednesday.
The move comes in the wake of recent reports that CFPB plans to end its policy of proactively auditing financial companies to catch predatory lenders targeting members of the military community, and instead will only rely on complaints from service members and their families to trigger investigations into lenders.
To ensure that service members remain protected against predatory lenders, Nelson sent a letter to Secretary of Defense James Mattis, asking the Department of Defense to step in and protect service members to counter CFPB’s rollbacks. “This proposed change rolls back years of progress in preventing predatory lenders from targeting servicemembers and their families“ Nelson said. In addition to Nelson, the letter was signed by Sens. Claire McCaskill (D-Mo.), Jack Reed (D-R.I.), Heidi Heitkamp (D-N.D.), Doug Jones (D-Ala.), Tammy Baldwin (D-Wis.), Joe Donnelly (D-Ind.), and Tammy Duckworth (D-Ill.)
Earlier this month, Nelson also filed a bill to further improve the Military Lending Act and further enhance financial protections for U.S. service members and their families.
You can watch a video of his floor speech here:
And a rush transcript and his speech can be found below.
U.S. Sen. Bill Nelson
Remarks on the Senate floor
August 22, 2018
Sen. Nelson: Madam president, you can’t say it any better than the senator from Rhode Island has said it. He’s a West Point graduate, was a company commander, was executive officer of a brigade. He just told us the 82 airborne. He’s seen what has happened to these young troops, that they get their pay. They go outside the gates. There are the folks that want to get loans for them. And then they run up rates as much as 100% and 150%.
And that’s why we passed the Military Lending Act back in 2006, to cap those rates at 36%. That’s high enough, but it’s a lot less than 100% to 150% rates that these poor troops, unsuspecting, and they’re being taken advantage of and the former 82nd airborne member, the senator from Rhode Island has just shared in his personal experience what would happen.
Troops would not show up for muster because suddenly their car had been repossessed or they had people hounding them. Well, what has happened over the years since 2006 when we passed the bill is in fact they found ways to get around it.
And now commanders are receiving harassment calls. They found a way to get around the 36%. Well, what we want to do is we want to lower it down to 24%.
Now, if someone cannot do well in business and still get a return of 24% on what they’re loaning out, then they shouldn’t be in business. And especially they shouldn’t be in business to take advantage of our United States military troops. And that’s why I have introduced the Military Lending Improvement Act of 2018, and that’s why it goes into more specifics that not only lower the interest rate but ensure that auto loans are covered by the Military Lending Act.
Let’s remove any ambiguity there. To prohibit creditors from calling a service member’s commanding officer, or improperly threatening action under the uniform code of military justice to collect a debt from a United States military service member.
It’s common sense. It will show our members of our military that the law will protect them and it will go after these shady lenders. And I urge all of our colleagues to support it.
Obviously, this doesn’t have anything to do with partisanship. This is supporting the troops.
I urge our fellow members of the Senate to work with Senator Reed and me to get the CFPB leadership off the dime to protect our bravest from the financial scams.
And it is just mind boggling that the Consumer Financial Protection Bureau that is set up for the purpose of protecting consumers would now turn a blind eye to protecting some of the most vulnerable who almost everybody in America would say we want to protect.
And that’s because there are the unscrupulous lenders. We saw a lot of this, Madam President, in the early years of the wars of Afghanistan and Iraq. When a service member was overseas in Operation Enduring Freedom and Operation Iraqi Freedom, they were being scammed by the payday, the title loan, and other kinds of lenders.
And they were charged those exorbitant rates. It’s just morally wrong. And that’s what brought the law in 2006. But now we need to update that law.
Back in 2006, there was a Department of Defense report that told the story of one young service member who was charged $100 to take out a $500 loan.
And now using the CFPB’s formula, that equates to an annual percentage rate of $520%. That service member was forced to take out other loans. He had to do multiple rollovers to pay off the initial $500. It snowballed into a cost of $15,000 when it was all said and the service member can’t pay that. And so that law was passed in 2006. But now we need to update it.
And before we update it in law, we need to get the CFPB to act and to protect the consumer. The law says that creditors, and I quote, may not impose an interest rate higher than 36%, and it says that specifically on service members. There’s no ambiguity there. So the CFPB ought to enforce that law until we update it with this new one.
And then when you have to force the member of the military to have to be concerned and harassed and take away from his duties and to file a complaint with the CFPB, it just ignores the law and what is there to protect the very people that we want to protect.
Madam president, indeed this is a matter of right and wrong. Indeed this is a moral reason.
Let’s get the administration to enforce the existing law and then let’s update that existing law with even tighter restrictions on the lenders that are taking advantage of the very people we want to honor and help the people in uniform that are protecting this country. Madam president, I yield the floor.