Congress: More Can Be Done To Help Soldiers

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Congress, the Armed Forces and affiliated credit unions and banks have gone a long way toward improving the financial lot of America's fighting soldiers since the 2003 invasion of Iraq, but a lot more can be done, lawmakers said last week during congressional hearings on the financial needs of the military and their family.

Credit unions can play a vital role in ensuring that soldiers need not worry about their financial needs at home or those of their loved ones while they are fighting for their country, several members of the House Financial Services Subcommittee on Investigations and Oversight noted. "Institutions like credit unions and private financial institutions work hard to overcome these problems," said Rep. Sue Kelly (R-NY), chairman of the panel, of the stories of predatory lending practices and financial fraud plaguing many of the military installations in the U.S.

Since the invasion of Afghanistan and Iraq, Congress has raised military pay levels, increased combat pay, hiked family separation allowances, allowed reimbursement for military leave travel, and required personal financial management training for all military personnel, contributing to a vast improvement in the financial prospects of those deployed for combat, according to a new study issued last week by the General Accountability Office.

In fact, military pay, on average, has risen faster than civilian pay since 1999, according to Valerie Melvin, director of the Defense Capabilities Management Team at the GAO.

A representative of the National Association of Securities Dealers, which licenses the nation's stock brokers and financial planners, said the NASD created a nationwide program earlier this year to educate military personnel and their dependents on the intricacies and perils of sophisticated financial products and services, many of which have victimized soldiers and sailors in the past. The program includes an online educational center at; on-the-ground training to support the military's Personal Financial Management program; training for military spouses; print and online educational material; and partnerships with the Department of Defense, SEC and National Military Family Association to educate servicemembers.

As a result of all these initiatives, deployment status "does not affect the financial condition of active duty servicemembers," the GAO found in its new study. Data from a 2003 Department of Defense survey show that servicemembers who were deployed at least 30 days reported similar levels of financial health or problems as those who had not deployed.

But there are still critical problems facing military personnel, both those deployed for combat and the non-deployed, according to lawmakers and GAO.

For example, in January 2005, 6,000 of 71,000 deployed soldiers who had dependents did not obtain their family separation allowance in a timely manner. In addition, problems with creditors, some caused by lack of Internet, telephone or mail access, a well as high fees, can affect a soldier's ability to resolve financial issues, the GAO found.

Rep. Steve Israel (D-NY) said he is concerned that even though soldiers in combat are protected from creditors under the Soldiers and Sailors Civil Relief Act, many creditors are not adequately notified of a soldier's combat status. "We have soldiers who are in Falujah (Iraq) in Humvees having their cars repossessed back home," said Israel. He suggested some initiative, maybe legislation, is needed to connect the Department of Defense to the three major credit bureaus so that all creditors are properly notified of a soldier's combat status.

Several lawmakers focused on the proliferation of payday lenders, pawnshops and other high-cost finance companies near military bases. Cutler Dawson, president of Navy FCU, said that continues to be a major concern of NFCU, which has endeavored to introduce alternative products for members needing those services. "Payday lending is the spiral of doom for people who get involved with them," said Dawson, who was testifying before the subcommittee.

Dawson told the subcommitee of the variety of programs the world's largest credit union offers to assist members deployed for combat. They include: overseas branches; personal financial managamenet training and predeployment training for the Navy and the Marine Corps; budgetary and debt counseling; assistance for survivors of deceased members, serving as liaison with attorneys and the military; guarantees for utility deposits for members in areas of Navy and Marine Corps installations; and, of course, the lower rates on loans and higher rates on deposits for which credit unions are well known.

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