WASHINGTON, D.C. – Today, U.S. Sen. Sherrod Brown (D-OH) hosted a news conference call to preview legislation the Veterans and Consumers Fair Credit Act, that would extend financial protections that currently apply to active-duty servicemembers to veterans, surviving family members and all consumers.
In 2006, Congress passed the Military Lending Act, which reins in the financial service industry from abusive and predatory lending practices and caps the Annual Percentage Rate (APR) on financial loans at 36 percent for active-duty servicemembers and their families. However, current law doesn’t extend those same protections to veterans, Gold Star families or other Americans.
Brown’s bill would build on the Military Lending Act and extend well-deserved protections and the 36 percent interest rate cap to veterans, surviving family members, and all consumers.
“In Ohio, there are more than 650 payday or car title loan stores. Their loans saddle borrowers with interest rates that regularly top 600 percent, and often trap borrowers in a downward spiral of debt. And we know these companies often target military families and veterans. We need to make it clear in the law – you can’t scam veterans or any other Ohioans with abusive loans that trap people in debt. And the Consumer Protection Bureau needs to do its job and go after lenders that do,” said Brown.
Brown was joined on the call by Jermaine Ferguson, a Marine Corps veteran and legislative coordinator for The American Legion Department of Ohio. The American Legion has endorsed Brown’s bill.
“The American Legion Department of Ohio is a leading veterans-service organization in the state of Ohio representing over 90,000 wartime veterans. Today, we are grateful to Senator Brown for co-sponsoring the Veterans and Consumers Fair Credit Act of 2019, which will extend the same consumer protections that the Military Lending Act of 2006 secured for active-duty members to veterans, Gold Star families, and our neighbors. The Veterans and Consumers Fair Credit act of 2019, will protect our families who may experience a temporary financial hurdle from unscrupulous and predatory lenders,” said Ferguson.
According to the Department of Defense, “each separation of a service member is estimated to cost the Department $57,333, and the Department estimates that each year approximately 4,703 to 7,957 service members are involuntarily separated due to financial distress.”
The MLA does not currently protect veterans, Gold Star families, or other Americans from abusive, predatory lending. But it does show us how hundreds of millions of American consumers could benefit from expanding the traditional 36 percent APR cap to every American. The MLA’s track record also demonstrates that providing for reasonable, responsible limits on interest rates does not cut off consumers’ access to credit.
The legislation has been endorsed by a wide variety of consumer, civil rights, veterans, service-member organizations, and advocates, including: The American Legion, National Military Families Association; Iraq and Afghanistan Veterans of America; Veterans Education Success; Allied Progress, Americans for Financial Reform; Center for Responsible Lending; Consumer Action; Consumer Federation of America; The Leadership Conference on Civil and Human Rights; NAACP; National Consumer Law Center (on behalf of its low-income clients); Prosperity Now; UnidosUS; and Hollister Petraeus and Colonel Paul E. Kantwill, USA (Ret), the former Assistant Directors, Consumer Financial Protection Bureau, Office of Servicemember Affairs.