Payday loan firms have been exploiting loopholes in the Military Lending Act capping interest rates at 36 percent to gouge troops and their families, the Consumer Financial Protection Bureau (CFPB) charged in a report released Monday.
"The current rules under the Military Lending Act are akin to sending a soldier into battle with a flak jacket but no helmet," said Richard Cordray, the bureau's director. "To give our troops full-cover protection, the rules need to be expanded."
The 36-percent rule of the legislation, which is implemented by the Defense Department and enforced by the bureau, doesn't currently apply to payday loans with initial terms in excess of 91 days, or to auto title loans in which the covered duration is less than 181 days.
"This means creditors can easily avoid the Act's interest rate cap by simply making the initial term of a payday loan longer than three months," the report said.
Unscrupulous lenders can also get around the auto loan provisions of the Act by making the contract term for an auto title loan longer than 181 days.
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But when you try to rein them in the right screams communism. Sorry you just cannot let the banking system run wild, they need serious controls.
ReplyDeleteOur "leaders", the ones who trip over each other "thanking members for their service", "capped" interest rates at 36%.
ReplyDeleteHow nice of them. 36%. I'm all warm and fuzzy over their commitment to military members. 36%.
Let that number roll off your tongue for a minute. 36%. INTEREST!
AND they made it easy to circumvent the law, too.
THAT'S what I call commitment.
How did "your guy" vote on that?
Exactly.