Well, here's some good news and bad news:
The Department of Defense released proposed rules today targeting the practices of a broad range of high-cost lenders and prohibiting them from charging service members interest rates over 36 percent.
The new rules would overhaul the Military Lending Act, which, when enacted in 2007, narrowly defined potentially abusive loans. But as ProPublica and Marketplace reported last year, high-cost lenders easily circumvented the law by offering longer-term loans. As a result, those pitching payday, auto-title, and installment loans continued to peddle credit from stores lining the streets near military bases.
via Pro Publica
So, the good news is that loans of over 36% will be banned; the bad news is that loans of up to 36% will be allowed. There was a time, deep in the distant past, when there were such things as usury laws, that actually imposed reasonable limits on the rate of interest anyone but a criminal could charge. (Criminals were not allowed to charge those rates either, but they did. That's why it was a crime.) This was back in the day, by the way, when you could get a rate of interest on a savings account that was larger than microscopic, so the spread between what you could get for your money and what you had to pay for money was far narrower than today. Rest assured, 36% was beyond the pale.
As the quoted article goes on to say, service people are particularly vulnerable to these predators for a number of reasons, including the fact that, unlike the folks who build our weapons and push us into war, they are not that highly paid.
So, we have come a long way, to a time when the journalists at Pro Publica can proclaim in all honesty that it really is a very big deal that these predatory lenders are being restricted in any way whatsoever. It runs against the trend after all. One small step, but no giant leap.
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