Expressing Concern with Financial Traps Aimed at Veterans

Floor Speech

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Ms. JUDY CHU of California. Mr. Speaker, I rise today to speak for veterans as we approach Veterans Day this year. These brave men and women risked their lives to protect us all. Yet, today we have companies actively preying on veterans. This is appalling and needs to end.

Some of the worst offenses come from payday lenders. Payday loans are high-cost, small-dollar loans, averaging $300 per loan. What makes these loans so dangerous is that they have average interest rates in the triple digits--at times as high as 391 percent. If at the end of the loan period, which typically spans two weeks or the next payday, the borrower cannot pay it off, he or she will be forced to take out another loan to pay off the first loan in addition to the exorbitant accumulated interest. This is the beginning of a cycle of debt.

Veterans are highly susceptible to these practices and have become a customer base for these loan schemes. In fact, payday lenders have been known to set up around military bases. In 2006, Congress passed the Military Lending Act to cap interest rates for military loans, but even so, these lenders find ways to exploit servicemembers, veterans, and military families. One study found that 10 percent of veterans leave military service with more than $40,000 in debt. If our men and women heed the call to defend our country, they should not be led to financial traps that could prevent them from transitioning to civilian life successfully.

This Veterans Day, I stand with veterans and urge both the private lending sector and Congress to do more to protect our veterans, who deserve our utmost respect.

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