Will GOP Senators Rubber Stamp Mulvaney Move Exposing Servicemembers to Financial Predators by Confirming Kraninger?

Leading Senate Banking Committee Republicans Voted to Give CFPB Authority to Enforce Military Lending Act, Now They Seem Poised to Support a New Director Who Would Expose Servicemembers to Financial Predators

Will Corker, Heller, Moran, Scott, Shelby, and Toomey sell out servicemembers?


WASHINGTON, D.C. – Six Republicans on the Senate Banking Committee appear poised to confirm Kathy Kraninger as Director of the Consumer Financial Protection Bureau (CFPB), even though she would maintain a recent decision by “Acting Director” Mick Mulvaney that will expose servicemembers and their families to financial predators by scaling back the Bureau’s supervision and enforcement of the Military Lending Act (MLA). Banking Committee members Sens. Richard Shelby (R-AL), Bob Corker (R-TN), Pat Toomey (R-PA), Dean Heller (R-NV), Tim Scott (R-SC), and Jerry Moran (R-KS) supported legislation that explicitly granted the CFPB authority to enforce the MLA just last year.

If these Senators are serious about protecting our men and women in uniform from predatory lenders, they cannot support Kathy Kraninger’s confirmation to lead the Consumer Financial Protection Bureau.  She will rubberstamp Mick Mulvaney’s depraved decision to stop actively holding financial scammers that target our servicemembers and their families accountable,” said Karl Frisch, executive director of Allied Progress.

Frisch continued, “Kathy Kraninger has said she does not disagree with anything Mulvaney has done at the CFPB – a statement as shocking as it is disappointing. He is systematically crippling the Bureau’s ability to protect consumers and now our servicemembers are on the chopping block. He may claim he wants Congress to fix this but he they have already given the CFPB authority to enforce the Military Lending Act. The sad truth is, Mulvaney doesn’t want the Bureau to hold financial predators accountable.”

Yesterday, 49 Democratic-aligned Senators sent a letter to Mulvaney seeking a “commitment” that the Bureau would continue to ensure that “servicemembers and their families receive all of their MLA protections by utilizing all of the authorities available to the CFPB.” The Senators requested a response no later than August 20.

WHAT YOU NEED TO KNOW

Senate Banking Republicans Have Shown Support for Efforts to Protect Servicemembers From Predatory Lenders

  • Richard Shelby, Bob Corker, Patrick Toomey, Dean Heller, Tim Scott and Jerry Moran voted for the FY 2013 NDAA Conference Report which specifically granted the CFPB and other financial regulators authority to enforce MLA. [HR 4310 Enrolled Bill, 112thCongress, 01/02/13; “Military Lending Act,” Board of Governors of the Federal Reserve System, accessed 08/13/18;and HR 4310, Senate Vote 229, 12/21/12]
  • The only Senator on the Committee who appears to have cast a vote “against” the Military Lending Act is Senator Mike Crapo, who voted against the FY 2013 NDAA Conference Report which specifically granted the CFPB and other financial regulators authority to enforce MLA. [HR 4310 Enrolled Bill, 112thCongress, 01/02/13; Military Lending Act,” Board of Governors of the Federal Reserve System, accessed 08/13/18; and HR 4310, Senate Vote 229, 12/21/12]

Research Shows That Servicemembers and Military Installations Are Specifically Targeted by Predatory Lenders

  • As early as 2005, researchers found that payday lenders were disproportionately clustered “in proximity to large military populations.” The study also found that in states with high military populations more than “60 percent of the 20 highest payday lending zip codes were associated with military installations.”[Holly Petraeus, “Hollister K. Petraeus Before the U.S. Senate Committee on Commerce, Science & Transportation,” Consumer Financial Protection Bureau, 11/20/13]
  • A 2006 Department of Defense study found that predatory lenders are “prevalent and target military personnel” with payday loans, car title loans, tax refund anticipation loans, and unsecured loans. The report noted that “[p]redatory lending practices are prevalent and target military personnel, either through proximity and prevalence around military installations, or through the use of affinity marketing techniques, particularly on-line.” [“Report on Predatory Lending Practices Directed at Members of the Armed Forces and Their Dependents,” United States Department of Defense, 08/09/06]

In Response to This Disturbing Research, the Department of Defense Asked Congress to Take Action

Congress Developed the Military Lending Act to Limit Interest Rates and Improve Disclosures for Certain Loans Offered to Servicemembers

  • Informed by the DoD’s troubling study on predatory lending, Congress considered and passed a measure codifying consumer protection for servicemembers. The Military Lending Act (MLA), legislation to limit interest rates and improve disclosures for certain loans offered to Service members, was introduced as an amendment to the John Warner National Defense Authorization Act for Fiscal Year 2007, which passed with little opposition. [“Military Lending Act: Timeline, New Rules, and Issues,” Congressional Research Service, 06/01/16; The Military Lending Act of 2006,” Center for Responsible Lending, accessed 08/13/18 and Actions Overview, H.R.5122 – 109thCongress, Congress.gov, 04/06/06]
  • The DoD finalized the regulations required by the MLA in 2007. They covered “traditional payday loans, car title loans, and refund anticipation loans,” but not other types of lending “with similar costs but varying structures.” [“Military Lending Act: Timeline, New Rules, and Issues,” Congressional Research Service, 06/01/16 and The Military Lending Act of 2006,” Center for Responsible Lending, accessed 08/13/18]

In August 2018, Mick Mulvaney’s CFPB Decided to Ease Off Predatory Lenders Who Target Servicemembers

  • Also, in August 2018, the CFPB announced that it would no longer use “supervisory examinations of lenders” to find violations of the Military Lending Act and will instead rely solely on consumer complaints. [Glenn Thrush, “Mulvaney Looks to Weaken Oversight of Military Lending,” The New York Times, 08/10/18]

Military Advocates Have Also Supported Protecting Service Members From Predatory Lenders

  • Former Army Chief of Staff Raymond Odierno testified that the Army has a lot of experience with predatory lenders and “‘none of it is very good experience.’” Odierno testified that predatory lenders target young soldiers when they first show up at military installations and take advantage of these soldiers with high interest loans. [“SEN. RICHARD J. DURBIN HOLDS A HEARING ON F.Y. 2014 U.S. ARMY BUDGET,” SENATE COMMITTEE ON APPROPRIATIONS, SUBCOMMITTEE ON DEFENSE, 05/22/13]
  • In 2018, the American Legion urged Congress to hold Mick Mulvaney accountable for supporting the mission and capabilities for the CFPB’s Office of Servicemember Affairs. “The American Legion strongly urges Congress to hold the director of the Consumer Financial Protection Bureau accountable for supporting the mission and capabilities of its Office of Servicemember Affairs.” [“THE AMERICAN LEGION LEGISLATIVE AGENDA,” American Legion, 02/28/18]
  • In 2015, The Iraq and Afghanistan Veterans of America recommended that payday lenders be barred from targeting servicemembers and their families within 100 miles of a military installation because the lenders weaken those families’ financial security. [“POLICY AGENDA FULFILL THE PROMISE TO TODAY’S VETERANS,Iraq Afghanistan Veterans of America, 2015]

# # #

Close

Join The Fight!

We need your help to hold powerful special interests accountable and empower hardworking Americans. Join our fight today!