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Public Statements

Hearing of the Senate Committee on Banking, Housing and Urban Affairs : Servicemembers, Veterans and Their Families in the Consumer Financial Marketplace

Statement

By:
Date:
Location: Washington, DC

"Thank you, Mr. Chairman.

"The issue of consumer protection for military servicemembers has long been a priority for this Committee. During the 109th Congress, while I was Chairman, this Committee examined reports of predatory lending practices aimed at members of the armed forces and their families. This examination identified a series of problematic tactics used to sell financial products to military personnel. It also identified regulatory gaps and a lack of coordination among financial regulators in handling military consumer protection issues.

"Based on our investigation, the Committee ultimately passed the Military Personnel Financial Services Protection Act of 2006. This law protects members of the Armed Forces from certain unscrupulous sales practices regarding the sale of insurance, financial and investment products. It also improved the ability of our regulators to enforce our consumer protection laws with respect to the military.

"Servicemembers and their families have unique needs with respect to their use of financial services due to special circumstances caused by their military service. For example, military personnel move regularly, which can make purchasing a home a very risky endeavor. In addition, military personnel are often very young and away from home for the first time. They often have to make important financial decisions without being able to consult with family or trusted advisors.

"Congress and the States have sought to address these problems through a variety of legislative and regulatory initiatives. As a result, at least 9 Federal regulators and state regulators in all 50 states currently have varying levels of regulatory, supervisory, and enforcement powers in this area. At the Federal level, this includes the Department of Defense, the FTC, the Federal Reserve Board, the SEC, the OCC, the FDIC, the Department of Education, the Department of Justice and, most recently, the Bureau for Consumer Financial Protection. Accordingly, there is no shortage of regulators.

"The real challenge is making sure that regulation keeps up with changes in technology and changes in the marketplace. In particular, I would like to hear whether new forms of lending to our military, such as online lending, present any new difficulties for enforcing consumer protections for military personnel.

"I would also like to know whether more can be done to ensure that military personnel and their families receive the information they need to exercise all of the rights available to them under federal laws such as the Servicemember's Civil Relief Act or SCRA. Recently, several banks have settled claims under the SCRA because they apparently foreclosed on members of the military while they were on active duty. In my view, this is the sort of problem no military member should have to worry about while they are fighting overseas.

"Mr. Chairman, while there often appears to be very little upon which our respective sides can agree, there is complete agreement on our joint commitment to supporting our men and women in uniform. I look forward to hearing about how we can continue that partnership from our witnesses today.

"Thank you, Mr. Chairman."


Source:
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