Legislation would require financial institutions on military bases to offer financial tools that promote savings and reduce need for payday loans
WASHINGTON, D.C. – Servicemembers and their families must cope with unique circumstances that can jeopardize their financial stability. Today, Congressman Edward J. Markey (D-Mass.) introduced H.R. 5946, the Military Savings Act, legislation to promote savings rates among military servicemembers and to decrease their need to turn to predatory payday lenders in times of financial crisis. The legislation establishes a pilot program in which financial institutions operating on military bases will offer innovative financial products to help troops and their families improve their financial situations. Military servicemembers are three times more likely than civilians to resort to predatory “payday” loans that charge exorbitant interest rates. And in one military study, 27 percent of military families carry $10,000 or more in credit card debt, compared with 16 percent of civilian families.
Rep. Markey introduced the Military Savings Act with original co-sponsors Reps. Rob Andrews (D-N.J.) and Niki Tsongas (D-Mass.), two members of the House Armed Services Committee.
“Our troops are heroes, but sometimes even heroes need help,” said Rep. Markey. “By spurring the creation of innovative savings tools for our troops, we can help ensure that military families facing unexpected expenses have a safety net ready and won’t have to turn to predatory payday lenders. Our brave men and women in uniform keep all of us secure; we must help them become financially secure and free from financial scams that could sap their savings. I look forward to working with my colleagues to help ensure that our brave men and women in the military have the resources they need to succeed financially in these tough economic times.”
“The scourge of predatory lending helped to fuel our recent financial crisis and was responsible for the tidal wave of foreclosures that continues to hinder our economic recovery,” said Rep. Tsongas. “Sadly, statistics reveal that these lenders also prey upon members of our military and their family members while they are defending our nation overseas. Encouraging greater savings provides a buffer against emergencies and guards against the pitfalls of predatory lending, which is why we are introducing this legislation today.”
“Our servicemembers have the right to be financially secure when they come home,” said Rep. Andrews. “This bill helps provide them with more choices, making it easier for these brave men and women to save money and avoid the debt that has plagued so many of their peers. The men and woman who have put their lives at risk to protect our freedoms certainly disserve the opportunity to achieve financial peace of mind and pursue their dreams.”
According to a recent report released by the Consumer Federation of America (CFA), which endorsed the legislation’s pilot program, although the Military Lending Act has reduced abusive lending, servicemembers are still exposed to many dangerous loans that threaten their financial well-being. In their endorsement letter, CFA stated that the creation of these innovative consumer products “is one of the most effective methods that Congress and the DOD could take to increase the savings rates of these families. … Knowing that there is money in the bank and that a predatory loan is not coming due allows servicemembers to concentrate on their job during deployment, and not on their finances back home.”