Udall, Heinrich Back DOD Plan To Better Protect Military Families From Abusive Financial Practices


WASHINGTON, D.C. – U.S. Senators Tom Udall and Martin Heinrich, D-N.M. are supporting the Department of Defense’s (DOD) plan to update the Military Lending Act (MLA) and close existing loopholes in order to better protect soldiers and their families from abusive financial practices. In a letter sent today to U.S. Secretary of Defense Chuck Hagel, the Senators expressed strong support for the proposed new rule to help prevent lenders from charging excessive fees and taking advantage of military families.

“As our service members are asked to take on even more tasks in defense of our nation, we should take every opportunity to protect them and their families here at home, especially from unscrupulous lenders,” the Senators wrote. “We strongly support the proposed MLA rule and urge that the final MLA rule be similarly robust in enhancing protections for service members and their families, producing significant cost savings for DOD, and improving military readiness.”

Following a 2006 Pentagon report that found that “predatory lending undermines military readiness, harms the morale of troops and their families, and adds to the cost of fielding an all-volunteer fighting force,” Congress passed the MLA.  This law capped the annual interest rates for consumer credit to service members and their dependents at 36 percent while giving DOD the authority to define what loans should be covered. The DOD’s 2007 implementing regulations narrowly included only three types of loans:

  • Payday loans: closed-end loans with terms of 91 days or fewer, for $2,000 or less;
  • Auto title loans: closed-end loans with terms of 181 days or fewer; and
  • Refund anticipation loans: closed-end credit.

In the proposed changes to the MLA, first announced in September, DOD seeks to close existing loopholes in the current MLA rule. The letter voices strong support for the proposed rule, arguing that the changes strike a better balance between protecting service members and their families while maintaining access to good credit. 

Udall and Heinrich joined U.S. Senators Dick Durbin (D-IL) and Jack Reed (D-RI) who led the letter, and 36 other Senators including, Mark Udall (D-CO), Levin (D-MI), Brown (D-OH), Hirono (D-HI), Manchin (D-WV), Warner (D-VA), Franken (D-MN), Baldwin (D-WI), Nelson (D-FL), Murphy (D-CT), Blumenthal (D-CT), Merkley (D-OR), Warren (D-MA), Gillibrand (D-NY), Murray (D-WA), Whitehouse (D-RI), King (I-ME), Klobuchar (D-MN), Kaine (D-VA), McCaskill (D-MO), Shaheen (D-NH), Schatz (D-HI), Markey (D-MA), Bennet (D-CO), Coons (D-DE), Donnelly (D-IN), Feinstein (D-CA), Cardin (D-MD), Carper (D-DE), Wyden (D-OR), Heitkamp (D-ND), Tester (D-MT), Boxer (D-CA), Hagan (D-NC), Harkin (D-IA), and Schumer (D-NY) in signing onto the letter.

The signatories include every Democratic member of the Senate Armed Services Committee. 

The comment period, which was recently extended for the proposed rule ends Dec. 26.

Read the full text of the letter here.


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