WASHINGTON — The Senate passed an amendment Monday that would tighten a law barring lenders from charging members of the military more than 36% interest on their loans.
The amendment to the defense authorization bill, sponsored by Sen. Jack Reed, D-R.I., strengthens the 2006 Military Lending Act by allowing the financial regulatory agencies to use their civil enforcement capabilities to uphold the 36% cap. Currently, violating the law is a criminal misdemeanor resulting in a fine or one year in jail or both, and criminal liability is only applicable if a lender violates the law knowingly.
"We need to stop unscrupulous lenders from targeting our soldiers, saddling them with enormous debt, and undermining our national security. This amendment enhances the Military Lending Act by allowing federal regulators to use all of the tools at their disposal to make sure lenders are following the law," said Reed, a former Army Ranger and senior member of the Armed Services and Banking committees, in a press release Monday. "We need to crack down on abusive lenders and aggressively go after those who violate the Military Lending Act."