The Defense Department on Tuesday significantly expanded regulations to protect military services members and their families from predatory lenders.
The revamp of the 2006 Military Lending Act is intended to close loopholes in the law that some lenders exploited to charge troops interest rates in the triple digits, driving them and their families into debt.
“We’re going to keep fighting to give our troops and veterans every chance to enjoy the American dream you helped defend,” President Obama said Tuesday in a speech before the Veterans of Foreign Wars convention in Pittsburgh, unveiling the changes.
{mosads}“Now, there’s already a lot of ‘protect our troops’ and ‘military families against unscrupulous predatory lenders,’ but I have to tell you, some of the worst abusers, like pay-day lenders, are exploiting loopholes to trap our troops in a vicious cycle of crushing debt,” he told the audience.
“So, today, we’re taking a new step. The Defense Department is closing these loopholes, so we can protect our men and women in uniform from predatory lenders,” he continued. “It is the right thing to do.”
The new rule expands the type of loans covered by the law, including car and installment loans, as well as certain kinds of credit cards, and caps interest rates at 36 percent, a provision that was included in the original bill.
“With this action, the department takes an important stand against companies that can prey on our men and women in uniform,” Deputy Secretary of Defense Bob Work said in a statement.
“This new rule addresses a range of credit products that previously escaped the scope of the regulation, compromising the financial readiness of our troops,” he added.
The rule change, which was previewed Monday night by administration officials, coincided with the five-year anniversary of the president signing the Dodd-Frank Wall Street reform bill into law.
Calling the measure “historic,” Obama said he “will not accept any efforts to roll back this law, or its strong protections for our economy and the American people, including our military families.”