Military Personnel Financial Services Protection Act

MILITARY PERSONNEL FINANCIAL SERVICES PROTECTION ACT -- (Extensions of Remarks - July 11, 2005)

SPEECH OF HON. GEOFF DAVIS OF KENTUCKY
IN THE HOUSE OF REPRESENTATIVES
MONDAY, JUNE 27, 2005

* Mr. DAVIS of Kentucky. Mr. Speaker, today, I rise in support of Title II in my legislation, H.R. 458. Title II regulates so-called ``military lenders,'' and provides significant safeguards to protect our armed services personnel from abusive consumer credit lending and collection practices.

* A number of lenders target military personnel. While most lenders treat their customers fairly, some of these creditors engage in deceptive sales and marketing practices and employ coercive debt collection practices. I know about companies like Pioneer Financial that engage in predatory lending with high rates and hidden fees and frequently refiance loans to generate more fees for the lender while providing little or no benefit to the service member.

* Like many others, I myself, Mr. Speaker, while a young officer in the military, was misled into thinking that the military was endorsing these types of lenders and loan products. I also know that in some instances, lenders go as far to garnish military personnel's wages or require them to agree to have their loan repaid through the allotment system.

* Predatory lenders have contacted or threatened to contact the borrower's commanding officer or others in the borrower's chain of command in order to collect debt. Furthermore, some lenders have required borrowers to sign documents as a condition of obtaining the loan that purportedly waive their legal rights, including the requirement that the borrower submit to mandatory arbitration of any dispute instead of being able to institute a legal action.

* Title II in H.R. 458 recognizes that many military personnel do not understand or appreciate their borrowing options or rights or what can happen if they do not carefully manage their finances after taking out a loan to pay off or consolidate old debts. Accordingly, under Title II, prior to the consummation of a loan transaction, military lenders also would be required to provide detailed disclosures.

* Mr. Speaker, in the last Congress, each of the Members who serve on both the House Armed Services and Financial Services Committees expressed concerns about these types of lenders, including predatory lenders and some payday lenders, taking advantage of members of our armed forces.

* As the newest Member to serve on both committees, I endorsed my colleagues' views by adding these special protections for military borrowers in Title II of H.R. 458, to ensure that all high interest lenders comply with essential safeguards that protect our men and women in the armed forces.

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