Measure doesn’t go far enough to curb bad lending practices - East Valley Tribune: Opinion

Measure doesn’t go far enough to curb bad lending practices

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Posted: Saturday, September 13, 2008 6:05 pm | Updated: 11:00 pm, Fri Oct 7, 2011.

Why does the Pentagon hate predatory payday lending? "You can have disastrous consequences for the quality of life and for the careers of service members," Dr. David Chu told a Senate committee in 2006, as undersecretary of defense.

Payday loan reforms would keep vital option available to Arizonans

It was the worst financial problem for our troops in 100 years, said Admiral Charles Abbot, the president of the Army-Navy Relief Society. "We see every day in our offices around the country individuals who have come in and fallen into the Venus flytrap of the payday lending problem and it has literally destroyed their lives."

"We've seen the increasing costs of these personal-finance problems," said Holly Petraeus to Kiplinger. Petraeus is director of the Better Business Bureau Military Line, which provides consumer education to military families. "People were even losing their security clearances."

The Pentagon asked Congress for, and got, a 36 percent interest rate cap for military families to stop this unconscionable marketing of 400 percent debt traps to young families who needed to be prepared to put their full attention on the task at hand, fighting to protect our country.

As a retired military officer and a resident of Tucson, I urge Arizonans to vote "no" on Proposition 200, which is called the Payday Loan Reform Act.

Does this mean I disagree with the military leaders who went to such lengths to protect their troops from predatory lenders? Not at all - I couldn't agree more. I urge Arizonans to vote "no" because Prop. 200 is no reform at all - it would legalize 400 percent rates forever. It would divert dollars from our state economy and send them out of state to huge national chains that have figured out how to fool states across the country into letting them run their payday loan-sharking schemes.

If our active-duty military personnel don't deserve loan sharks leaning on them for a chunk of their paychecks week after week, neither do our retired military personnel, our reserves, and what's more, our hardworking teachers, police officers, firefighters, bus drivers, service-industry workers and sales men and women. Payday loans target cash-poor people who are working every day to remain financially stable and trap them in a scheme that drains as much interest from their paychecks as possible.

Our young soldiers and their immediate families often make too little money to start with. It was stomach-churning to see how payday loan stores clustered outside the gates of military bases before the cap, ready to take advantage of these brave men and women.

Since Sept. 11, 2001, nationwide more than 51 percent of Army Guard members and 31 percent of Air Guard members have been activated to meet homeland and overseas demands. Capt. Mark D. Patton, commanding officer at the Point Loma Naval Base in California, testified before Congress that between 2000 and 2005, the number of sailors and Marines who had their security clearances denied or revoked because of financial problems increased by 1,600 percent.

"There is no enemy that our Navy is more passionate about defeating than one who targets our own sailors," he said.

Payday lenders want borrowers to believe they can meet the loan's terms, when they know most customers will be stuck paying interest repeatedly without paying down the loan. They want the public to believe that interest-rate disclosures shouldn't apply to their loans, when they know full well that the 400 percent APR is an accurate measure of the high cost of payday loans.

And they want voters to believe that Prop. 200 reforms payday lending, when they know full well that it will legalize their 400 percent rates forever.

Please join your military brothers and sisters, AARP, faith groups and many others who understand the real deal.

Vote "no" on Prop. 200 - it's no reform at all.

Tom Yearout of Tucson is a retired military officer.

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