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Possible Enforcement Changes to Military Lending Act Spark Outcry

Two letters containing 38 signatures of veteran and military organization service members are expressing concern about the enforcement of the federal Military Lending Act (MLA) have been sent to U.S. Secretary of Defense James Mattis and Mick Mulvaney, acting director of the Consumer Financial Protection Bureau.

The letters are in response to a reported plan by Mulvaney to halt supervisory checks on banks and non-bank lenders for compliance with MLA provisions, including the act’s 36-percent cap on loans to service members, and a plan to allow car lenders to circumvent some rules, such as offering gap insurance as an add-on.

The letters have the same content and text, and one copies White House Chief of Staff John Kelly. They were sent in response to a report on National Public Radio – which based the report on internal White House documents it said it received indicating some protections would be taken away that seek to shield service members from predatory practices in auto loans – and a story in the New York Times that said the Trump administration “is planning to suspend routine examinations of lenders for violations of the Military Lending Act, which was devised to protect military service members and their families from financial fraud, predatory loans and credit card gouging, according to internal agency documents.”

The proposal to suspend routine examinations of lenders for MLA violations “surprised advocates for military families, who have urged the government to use its powers to crack down harder on unscrupulous lenders,” according to the Times story. “The consumer bureau conducted dozens of investigations into payday and other lenders during the Obama administration without any significant legal opposition, and no lenders are currently challenging its oversight based on the law, according to administration officials.”

The letters urge “continued strong enforcement and supervision of the Military Lending Act, and to stand against any attempts to undermine or weaken it,” adding: “Servicemembers and their families suffer harm when predatory lenders target them with financial fraud and extremely high interest rates. As you know, maps of the location of payday lenders have shown they surround military bases and target the troops.”

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