Predatory lenders salivate when a service member signs loan papers, a report last year by the Consumer Financial Protection Bureau showed. In one instance, a soldier spent almost $1,430 to pay off a $485 loan in just six months.
Congress has long been aware that thousands of service members annually fall victim to short-term, high-interest loans. Last week, the House Armed Services Committee voted to move forward with a Department of Defense plan to expand protections for the nation's military men and women from predatory lenders.
But in keeping with tradition, John Kline, Minnesota's Most Reprehensible Congressman (TM) and a retired Marine colonel, voted against his military brethren.
In a tight 32-30 vote, committee members voted to nix language authored by House Republicans that would have imposed a one-year delay on new rules designed to protect service members from usurious payday loans and other predatory lending practices.
Bowing to pressure from the banking lobby, Kline and 29 other members sought to give lenders another 12 months of free reign -- even though the issue has been before the committee since 2006.
Congress passed legislation imposing a 36 percent interest rate cap for auto title, payday, and tax refund anticipation loans to service members and their families. But lenders quickly flanked the protections.
Laws applying to 91 days or shorter payday loans and amounts of $2,000 or less were sidestepped with 92-day and $2,001 loans.
Congress responded in 2012, passing a new law directing the Defense Department to close the loopholes.
These new rules, which include removing prepayment penalties and having the lender show a loan's annual percentage rate in writing, were finalized last fall.
Public Citizen and the Consumer Federation of America, among other various groups, called the initiative overdue.
But Kline and other GOP members called for a delay to study the new rule's effects. This despite the fact that the Consumer Financial Protection Bureau had already done a pair of such studies.
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