The Pentagon is proposing regulation changes that protect members of the armed forces from predatory lending.
When congress passed the Military Lending Act, or MLA, in 2006, they thought they had won the war on predatory lending to service members. The MLA aimed to limit the maximum interest rate that lenders could charge service members to a 36 percent annual rate.
But some payday and car title lenders found loopholes in the narrow definitions of credit written into the law.
"They came up with some creative ways," said Karen Landry, executive director of War on Poverty, Inc., a community development organization in Jacksonville. "[The lenders] weren’t able to charge 300 or 400 percent interest rates on loans for 90 days. So they just changed them to 91 days."
Amending the MLA will allow give it broader coverage of loan products marketed to service members, keeping the 36 percent annual percentage rate cap.
You can follow Peter Haden on Twitter @HadenMedia.