All the News That Fits a Narrative
The New York Times published a feature on the financial challenges active military servicemembers face. As with many of the journalistic efforts of late covering the consumer credit market, what’s more interesting than what is in the story is what is not.
For example, the story attempts to highlight the risks of lenders who put borrowers in a debt cycle. Yet, the Times fails to mention the Military Lending Act and that the Pentagon claims it protects active servicemembers from such predatory lenders. But lack of focus on the MLA and its ills is only a small part of the issues with the article.
The story also fails to include a fair-minded detailing of safe and reliable options available to military personnel, as well as why those options are preferable to predatory lenders. Instead, the Times refers to any company servicing the market as “the center of an ecosystem that thrives on government paychecks,” and “cheaters, charlatans and others who wish to get their claws into military paychecks.”
So, who can subprime borrowers or those with no credit record turn to for access to ethical, reliable forms of credit when they need emergency funds? In the case of military servicemembers, particularly those with little or no credit history, the credit options available to New York Times reporters may not be accessible.
AFSA members serve military servicemembers and their families, some exclusively, when they are in tough financial straits. They do so in a manner that helps their clients feel more secure about their finances, with underwriting, no hidden fees, no balloon payments or penalties for early repayment … the opposite of the types of loans that the Times focuses on.
Similarly, the Times doesn’t take the time to outline the hurdles the military puts in place that require access to credit and hinder younger servicemembers from gaining a stable financial foothold. For example, by requiring upfront payment of moving expenses, which can drain a family’s bank account before they have settled into to a new posting.
And then, the Times simply gets facts wrong. For example, the author claims the Defense Department’s Mypay system “allows lenders to siphon money directly from soldiers’ paychecks,” when no lender has any access to service members’ Mypay accounts unless they opt-in to repay their loan.
The Times story is yet another reminder about the ongoing inability of policymakers to get a clear and honest evaluation of the effect of the MLA’s 36% rate cap. We have seen plenty of anecdotal evidence that the MLA is ineffective and harming the very people it claims to help. To date, the Department of Defense has not released any data on the MLA publicly, let alone to Members of Congress who have requested it.
July 6th, 2022
