Military Commanders in California Call for Crackdown on Payday Loans
By Paul RizzoPayday Loan Writer
Some of California’s top military commanders will again call on the Legislature to crack down on payday loans, months after a reform measure collapsed at the last minute amid accusations of deception and resistance from an odd liberal-conservative alliance.
The Daily Breeze has the story.
Gov. Arnold Schwarzenegger has directed a panel of generals and other advisers to recommend new legislation to rein in payday loan practices aimed at the military.
“Our servicemen and women should not have to worry about financial predators trying to take advantage of their deployment situation,” Schwarzenegger said when he appointed the task force this fall.
The Republican governor is working with Democratic Assembly members Ted Lieu of Torrance and Lori Saldana of San Diego on a payday advance loan measure that is expected to be introduced this week.
Details have not been finalized, but the authors say it could impose limits on fees, among other industry practices. A separate bill will look at how to limit industry advertising that makes it appear as if a company is endorsed by the military.
The legislation also would broaden state authority to pursue cash loan lenders who violate a federal 36 percent interest rate cap.
Congress approved the cap earlier this year, but left enforcement in the hands of the Pentagon. Leiu and Saldana said the Pentagon cannot be expected to pursue complaints given wartime pressures and other global responsibilities.
Payday loan law needs teeth:”We’re putting teeth in federal law,” Lieu said. At the same time, he said, the state can do little to solve the true problem: low pay.
“The [faxless payday loan] industry knows it has an underpaid, captive audience to target,” Lieu said. “We’re trying to address a symptom. The root of the problem is our soldiers are grossly underpaid.”
Military leaders have been urging California lawmakers and Congress to step in, claiming that financial troubles risk security clearances and could limit deployments.
“They are expected to be physically ready, psychologically ready and financially ready” before deployment, said Michael Lehnert, commanding general of the seven bases that make up Marine Corps Installations West. “We have seen a dramatic increase in those who have hit the wall financially. … It is having an effect on our readiness.”
Marine Sgt. Major Wayne Bell of the Marine Corps Installations West said he has talked to troops on leave staring at returning to hot spots. He describes their mood and why they spend freely this way with regard to quick cash loans:
“We’re going to live our lives to the fullest. There’s no guarantee we’re going to come back (home).”
Military payday loan industry representatives say they have no intention of interfering with combat readiness and have offered to work with commanders. But they oppose efforts to regulate the business, saying the vast majority of loans are for one-time emergencies and are repaid within two weeks.
The California measure appeared set for passage until departing Sen. Bill Morrow of Oceanside, who served in the Marines, gave an impassioned floor speech that turned the tide.
Senator raises payday advance bill objections: “Some of the proponents of this bill and one in particular who wears the uniform of a U.S. military officer has questioned my loyalty to country and corps,” Morrow said during the debate.
The bill would interfere with free markets, ban binding arbitration and lead to aggressive regulations on no fax cash advance loans issued to civilians, Morrow said.
Some Democrats aligned with Morrow, saying they were concerned it would lead to more sweeping legislation that could punish the poor who cannot qualify for traditional loans.
