Center for Responsible Lending: California Soldiers Sabotaged by Military Payday Loans
By J.J. CameronPayday Loan Writer
Military payday loans? You've recently made a new enemy. The high-interest cash advances that target our armed forces are under attack in California, as the Center for Responsible Lending leads the way.
As High-ranking Navy and Marine officers, consumer groups and their allies in the legislature tried to ban such pay day loan lending, it appears as though the'll fall short when the legislative session ends this week.
"We may have missed a chance to keep our service people out of the clutches of predators," said Paul Leonard, director of the California office of the Center for Responsible Lending, a nonprofit that goes after predatory lenders."Our legislators could give them some financial body armor, but it doesn't look like that will happen."
In California, the average faxless payday loan borrower ends up paying $660 on a $255 an advance. Making monetary matters worse, thse providers cluster around the nation's military bases seeking to hook young, cash-strapped, financially inexperienced soldiers and sailors on this expensive kind of debt. Military people are three or four times more likely to be victims of payday lenders, the Pentagon says.
"We're hearing more and more stories from sailors who get themselves in a cycle of debt," says Navy Capt. Mark Patton, who testified for the military at a hearing of the Senate Banking, Finance and Insurance Committee.
Worst of all, payday advance companies are hurting the military's ability to defend the country.
"Predatory lending," the Pentagon report said, "undermines military readiness, harms the morale of troops and their families, and adds to the cost of fielding an all volunteer fighting force."
The payday loan bill in question calls for a 36-percent ceiling on interest to members of the military - the same cap many states impose in their usury laws to ban loan sharks.
The bill was about to go to the floor of the Senate for a vote on military no fax payday loans when the banking committee called it back. At this point the committee had a chance to help the people who protect this country.
Instead they went AWOL: They stripped the 36-percent interest-rate cap. The military, hoping to get at least some protection for service members, is supporting the watered-down bill, but still wants the 36-percent cap.
It may get it, instead, from Congress. U.S. Senators Jim Talent, a Missouri Republican, and Bill Nelson, a Florida Democrat, got the cap passed in an amendment to a defense bill. While the payday cash loan lobbyists stalk Capitol Hill, the amendment awaits its fate in a House-Senate conference committee.
"We're hoping Congress will stand up to the payday industry if California legislators will not," said the Center for Responsible Lending's Paul Leonard. "Our service people deserve far better than financial ruin - or trying to survive in a war zone while they're fretting about how they'll pay next month's bills."
It's hard to argue with that.
