Defense Authorization Bill

Talent-Nelson file legislation to protect U.S. troops from predatory payday lenders
Media Release
June 20, 2006

WASHINGTON, D.C. U.S. Senators Jim Talent (R-Mo.) and Bill Nelson (D-Fla.) today announced they offered a bipartisan amendment to the Defense Authorization Bill to stop predatory payday lending practices targeted at our servicemen and women. The Talent-Nelson amendment would limit the Annual Percentage Rate (apr) that payday lenders can charge soldiers and their spouses for a loan. Payday lenders have targeted active duty service members who, in some cases, are now paying over 800 percent APR on a loan.

Predatory lending has been a staggering problem in Missouri and around the country in areas where our servicemen and woman are stationed, said Sen. Jim Talent, Chairman of the Seapower Subcommittee. These businesses prey on young military personnel and charge upwards of 800 percent APR on small loans. The Department of Defense has even said that servicemember debt resulting from predatory practices directly impacts troop readiness. We have to step in and stop these predatory lenders from making a quick buck at the expense of the livelihood and future of those defending our freedom.

Our servicemen and women and their families should not become the targets of unscrupulous lenders, said Sen. Bill Nelson.This proposal would spell the end of exorbitant 800-percent interest charges many soldiers now face.

In the House, U.S. Representative Sam Graves (MO-6) is the sponsor of companion legislation (H.R. 97) that has strong bipartisan support, including 34 Democrat and 30 Republican cosponsors.

Recent studies have shown that payday lending outlets are prevent around military installations and are readily available through the Internet, said Dr. David Chu, Under Secretary of Defense for Personnel and Readiness in a letter in support of the measure. This legislation provides the limits needed to motivate service members to consider solutions that may be difficult in their long term, but provide financial satiability for their future

The Talent-Nelson amendment applies only to military personnel and offers national protection from predatory payday lenders. According to the Navy-Marine Corps Relief Society (NMCRS), military families pay an estimated $80 million annually in payday loan fees. The amendment establishes a federal ceiling at 36 percent APR. It does not prohibit states from adopting legislation with a lower limit.

In this month's issue of Seapower magazine, Admiral Mike Mullen, Chief of Naval Operations, U.S. Navy, said “A sailor's financial readiness directly impacts unit readiness and the navy's ability to accomplish its mission…I am concerned with the number of sailors who are taken advantage of by predatory lending practices, the most common of which is the payday loan.”

In addition, an impressive list of military and veteran service organizations, with over 5.5 million members, support the Talent-Nelson legislation. The Military Coalition includes the Association of the United States Army (AUSA), Military Officers Association of America (MOAA), and the Veterans of Foreign Wars (VFW). Consumer groups like the Center for Responsible Lending, Consumer Federation of America, and Institute of Consumer Financial Education also support the bipartisan amendment