[Congressional Record Volume 151, Number 92 (Monday, July 11, 2005)]
[Extensions of Remarks]
[Page E1450]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          MILITARY PERSONNEL FINANCIAL SERVICES PROTECTION ACT

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                               speech of

                            HON. GEOFF DAVIS

                              of kentucky

                    in the house of representatives

                         Monday, June 27, 2005

  Mr. DAVIS of Kentucky. Mr. Speaker, today, I rise in support of Title 
II in my legislation, H.R. 458. Title II regulates so-called ``military 
lenders,'' and provides significant safeguards to protect our armed 
services personnel from abusive consumer credit lending and collection 
practices.
  A number of lenders target military personnel. While most lenders 
treat their customers fairly, some of these creditors engage in 
deceptive sales and marketing practices and employ coercive debt 
collection practices. I know about companies like Pioneer Financial 
that engage in predatory lending with high rates and hidden fees and 
frequently refiance loans to generate more fees for the lender while 
providing little or no benefit to the service member.
  Like many others, I myself, Mr. Speaker, while a young officer in the 
military, was misled into thinking that the military was endorsing 
these types of lenders and loan products. I also know that in some 
instances, lenders go as far to garnish military personnel's wages or 
require them to agree to have their loan repaid through the allotment 
system.
  Predatory lenders have contacted or threatened to contact the 
borrower's commanding officer or others in the borrower's chain of 
command in order to collect debt. Furthermore, some lenders have 
required borrowers to sign documents as a condition of obtaining the 
loan that purportedly waive their legal rights, including the 
requirement that the borrower submit to mandatory arbitration of any 
dispute instead of being able to institute a legal action.
  Title II in H.R. 458 recognizes that many military personnel do not 
understand or appreciate their borrowing options or rights or what can 
happen if they do not carefully manage their finances after taking out 
a loan to pay off or consolidate old debts. Accordingly, under Title 
II, prior to the consummation of a loan transaction, military lenders 
also would be required to provide detailed disclosures.
  Mr. Speaker, in the last Congress, each of the Members who serve on 
both the House Armed Services and Financial Services Committees 
expressed concerns about these types of lenders, including predatory 
lenders and some payday lenders, taking advantage of members of our 
armed forces.
  As the newest Member to serve on both committees, I endorsed my 
colleagues' views by adding these special protections for military 
borrowers in Title II of H.R. 458, to ensure that all high interest 
lenders comply with essential safeguards that protect our men and women 
in the armed forces.

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