California Lawmakers Reject Predatory Lending Protection Bill

Navy Newsstand ^ | 9/8/2006 3:31:00 PM | Mass Communication Specialist 3rd Class S. C. Irwin

[Excuse_My_Bellicosity]

SAN DIEGO (NNS) -- Navy officials said they will continue to pursue predatory lending legislation after California lawmakers significantly weakened language and then voted against Assembly Bill (AB) 1965 on the last day of session, Aug. 31.

Lawmakers in the California Senate rejected a bill that proposed a 36 percent rate cap for payday loans, deferral of payments while deployed and a grace period for up to 30 days upon a service member returning from a deployment.

“If you [a civilian] choose to find yourself in this situation, your job is not at risk, national security is not in jeopardy,” said Rear Adm. Len R. Hering Sr., commander, Navy Region Southwest. “While you are an active member of the military, if you find yourself in this situation, your job is at risk, your security clearances are removed, your livelihood is impacted and more importantly, the judicial system Uniform Code of Military Conduct will hold that individual accountable, and that is a protection we need to make sure exists in these types of legislations.”

A recent survey by the Defense Manpower Data Center indicated that 13 percent of Sailors have used predatory loans in the past 12 months, where interest rates can surpass 1,000 percent and cost military members and their families more than $80 million in yearly fees.

High-ranking officers from all military branches supported the legislation that restricted loan rates, provided service members deployed overseas with more time to repay debts and blocked companies from using military emblems as advertising.

“Any member of the military stationed here in California faces financial stress and some members have to address those with two jobs,” said Capt. Mark Patton, commanding officer of Naval Base Point Loma. “The message we need to get across to our uniformed folks here is that they have a lot of options available to them. The fact that you wear a uniform and you are active duty, serving our country, gives you special rights and privileges when in financial difficulty that many don’t understand.”

During a press conference held at the California State Capitol building Aug. 24, Assemblyman Ted Lieu (D-Torrance) said predatory lending practices keep service members in a cycle of debt and disrupt their ability to perform in the workplace.

“The Department of Defense has identified that payday-loan companies are targeting military personnel, and that’s affecting our military readiness and undermining our morale,” said Lieu, who authored AB 1965. “And so, what the bill does is provide protections to military members when they take out payday loans. AB 1965 targets a very serious problem and I’ll try to introduce the bill again six months from now.”

For more news from around the fleet, visit www.navy.mil.

[Excuse_My_Bellicosity]

060823-N-6843I-073 Sacramento, Calif. (Aug. 23, 2006) - Commander, Navy Region Southwest Rear Adm. Len R. Hering Sr. speaks to reporters during a press conference for assembly bill (AB) 1965 at the California State Capitol building. AB 1965 is a proposal to help stop predatory lending practices such as charging service members high interest rates on short-term loans. A survey by the Defense Manpower Data Center showed that 13 percent of Sailors have used predatory loans in the last 12 months, where interest rates can exceed 1,000 percent and cost military members and their families more than $80 million in yearly fees. U. S. Navy photo by Mass Communication Specialist 3rd Class S. C. Irwin (RELEASED)

[kinoxi]

the California Senate rejected a bill that proposed a 36 percent rate cap

36% isn't excessive? Damn! I guess because it was supported by the military the (dems)legislative knee jerk reaction was to not even look at it before voting.

[BW2221]

A lot of FReepers will claim this is great - the free market in action. There are no ethics in business, even if it means ripping off those who are defending our nation.

[NonValueAdded]

Why would they want to protect predatory lending?

[David Isaac]

Who the H--- is looking out for the troops here? The bill was sponsored by a Democrat, then voted down by a Democrat controled legislature. This seems to be a little bit nuts.

[Excuse_My_Bellicosity]

13 percent of Sailors have used predatory loans in the past 12 months

Sakes, that 1 in 7 people! What do you have to do to get through to people?! The military at all levels beat it into their members' heads that payday loans are a scam. I'm not necessarily against the legislation but the people who do it against the advice of anybody and everybody have got to be the worst hardheads ever, they can't say they weren't warned, and I don't have a whole heck of a lot of sympathy for them. I knew not to do that crap after being in the Navy for about 5 minutes.

[Excuse_My_Bellicosity]

I don't know. The people who go in for these loan scams are doing against the advice of a kazillion people above them who tell them not to do it, but that doesn't make scamming people right, either. It's screwed up that California would vote against this legislation.

[steveo]

36% isn't excessive? 36% isn't excessive?

Check out a place called "Cashcall.com"

They will 'lend you thousands'. I just checked the site and can't find the interest rate but a few weeks ago they were quoting a rate of 95% on a ten thousand dollar loan (ten years I think?). They advertise every ten minutes with different pitches (Including Gary Coleman). I can't believe they are allowed to operate.

[concentric circles]

AYES
Alquist; Battin; Bowen; Chesbro; Cox; Ducheny; Escutia; Kehoe; Kuehl; Lowenthal; Machado; Migden; Ortiz; Perata; Scott; Simitian; Soto; Speier; Torlakson; Vincent.

NOES
Aanestad; Ackerman; Ashburn; Denham; Dunn; Dutton; Figueroa; Florez; Harman; Hollingsworth; Margett; McClintock; Morrow; Murray; Poochigian; Romero; Runner.

Judging from the votes, I would guess there were significant problems with the way the bill was written or amended. Some very capable thinkers, conservatives, and supporters of the military voted against this bill. Sheila Kuehl voted for it.

[proxy_user]

"Why would they want to protect predatory lending?

Same reason companies offer sexual harassment seminars.....

[freeangel]

"why would they want to protect..?"

Georgia did the same thing. It stinks!

[LaMudBug]

I served in the USMCR in the early 50's of the Korean war. Corporal's pay was $75 a month and did not always make it to the end of the month.

Payday loans off base did not exist back then but did exist in the barracks. There were guys who did not go anywhere, did not drink, who would lend you $5 for a $10 payback at the next payday. Go figure that interest rate. Free enterprise and capitalism at work without REGULATION.

Can't help but wonder if this is still not happening and what will happen if off base regulation is enacted to control the interest rate. BTW, how may 18 - 19 year olds even know what an interest rate is...

Gung Ho... Semper Fi...

This is my rifle, this is my gun...
This is for business, this is for fun..
(Repeated over 100 times at max voice, while holding M1 over wrists on outstrected arms)
Wonder if they still do this, too.

[submarinerswife]

Sailors still haven't learned to avoid paying 35% interest on car loans in Virginia becasue they don't read the fine print despite the training and horror stories that are passed on.

Correct me if I'm wrong but why do we need legislation if we have GMT's held on this and other ways to avoid getting ripped off? Education is the key, is it not?