Senate Dems to CFPB's Mulvaney: Don't end military lending exams
WASHINGTON — All 49 Senate Democrats urged acting Consumer Financial Protection Bureau Director Mick Mulvaney to continue to protect military personnel from predatory lenders after reports that he may suspend examinations of firms for Military Lending Act compliance.
The senators, led by Sen. Jack Reed, D-R.I., the ranking member of the Senate Armed Services Committee and a member of the Senate Banking Committee, said they were concerned that ending the exams could be a costly burden to service members.
“The CFPB should not be abandoning its duty to protect our servicemembers and their families, and we seek your commitment that you will utilize all of the authorities available to the CFPB to ensure that servicemembers and their families continue to receive all of their MLA protections,” the senators said in a letter dated Wednesday.
The Military Lending Act caps the annual interest rate for an extension of consumer credit to a service member or his or her dependents at 36%.
The senators argued that the CFPB’s examinations and the agency’s Office of Servicemember Affairs serve as “the early warning system for MLA deficiencies so that they do not snowball into costly losses for servicemembers and avoidable litigation costs and penalties for lenders.”
“For our servicemembers, especially those who are deployed overseas facing hostile fire, it is unreasonable to place the burden of detecting and reporting MLA abuses on servicemembers, especially when they should be given every opportunity to focus squarely on their missions,” the senators wrote.
The letter follows a New York Times report that Mulvaney intends to end the supervisory examinations of lenders, arguing that the “proactive oversight” is not explicitly laid out in the law. National Public Radio has also reported that the Trump administration is proposing to ease restrictions on “gap insurance,” which could open up service members to predatory practices when they purchase cars.
The senators said the reports were “puzzling,” because the CFPB already had the authority to enforce the Military Lending Act and examine many types of lenders to assess risks to consumers.
“For generations, Americans have set partisanship aside and have made every effort to provide servicemembers and their families with all the resources and protections they deserve,” the senators wrote. “We ask no less of you.”