Defense Department Eyes PredatoryLending

TORONTO - (07/14/06) – The Department of Defense isexpected to issue a report any day that is highly critical ofpayday lenders, pawnshops and other high-cost financial serviceproviders preying on enlisted personnel, a well-placed Pentagonofficial said during NAFCU’s annual convention. Col. MichaelPachuta, director of morale, welfare and recreation policy for theUndersecretary of Defense, said the much-anticipated report willmake numerous recommendations, including that providers ofshort-term loans make detailed disclosures of effective percentagerates; that Congress set maximum rates and set limits on how loansmay be secured; and that lenders include clauses enabling borrowersto legally challenge unfair lending practices. The report isexpected to serve as a basis for anti-predatory loan legislationcurrently working its way through Congress.