|Carnahan Calls On Panetta To Protect Military Families|
July 30, 2012
(Washington, DC) - Congressman Russ Carnahan (D-MO) today sent a letter to Secretary of Defense Leon Panetta, calling on him to increase financial literacy education for all members of the United States Armed Forces, especially enlisted personnel and newly inducted service members. Carnahan’s request centered primarily on increasing the financial literacy education of service members regarding open-ended credit, including predatory forms of short-term lending and rent-to-own (RTO) businesses.
“Given the continued practices of many predatory lenders preying on military personnel, I urge the Department of Defense to place a higher priority on ensuring that all military members receive financial literacy education, beginning with their induction and basic training, with continuing education throughout their careers,” said Rep. Carnahan. “Financial literacy services are especially important for our enlisted personnel, many of whom struggle to make ends meet and are especially prone to victimization by these financial predators.”
Rep. Carnahan used the example of Fort Leonard Wood in Missouri, where one RTO outlet, until recently, only accepted payments via allotment from military pay. A financial counselor at the base reported that the majority of service members coming in for financial aid or counseling had expensive RTO contracts, citing examples of soldiers that earn less than id="mce_marker",000 per month paying nearly $500 in RTO bills for furniture alone.
“Our men and women in uniform make tremendous daily sacrifices in the name of our national security,” continued Rep. Carnahan in the letter. “The added burden of economic insecurity at the hands of predatory lenders is more than any soldier should have to bear. I believe education is the best way to ensure that military service is not a one-way path toward that insecurity.”
A May 2012 report by the Consumer Federation of America has revealed that many predatory lenders have skirted regulations to continue taking advantage of our troops. Specifically, some car title lenders and internet payday lenders have created open-end loan products with no end date and interest that can top 500 percent.
Meanwhile, RTO and other retail installment financing institutions, which are not regulated under MLA provisions, are commonly crowded around the gates of large military bases waiting to extend easy credit at extreme interest rates for discretionary purchases, often leaving military families short of funds to pay for essentials.