Protecting America’s Servicemembers
Our friends at the Consumer Financial Protection Bureau are out today with a commentary on protecting America’s military servicemembers. It’s an important topic not only for the men and women of the Armed Forces, but for the nation they serve to protect, as well as policymakers who set the rules that affect our servicemembers.
We agree with the CFPB that access to credit is an important tool for servicemembers and their families. For younger members of the Armed Forces, having a fundamental understanding of their personal finances is also a crucial tool to possess. We stand ready to work with the CFPB, as well as the Department of Defense and Congress, on ways to better equip our military with both.
But it is also important to note a couple of other points around the issue of how to best protect and serve those who do the same for us.
First, military pay has been an issue for decades, and in these high inflationary times it is important that Congress and the Department of Defense work to align U.S. Armed Forces pay scales to levels that give our sailors, soldiers and air and space corps, peace of mind and the opportunity to build strong financial futures. This goes hand in hand with giving young servicemembers the tools, such as MoneySKILL, to understand monthly budgeting and how to save for the future.
Second, it is important that all consumers be treated with respect, including military servicemembers, and AFSA member companies fulfill that commitment every day. And in that regard, vehicle repossessions are a last resort. This is another area in which AFSA is working with the CFPB so that we better understand their concerns and they better understand the overarching issues around it.
Finally, there are several other issues that affect active servicemembers that remain less clear today than perhaps a few years ago. For example, Congress and the Department of Defense imposed a 36% rate cap under the Military Lending Act on many forms of loans to servicemembers. As we see evidence that the MLA is not being enforced, the Defense Department continues to withhold all data related to how the MLA has financially affected active military personnel. It is time for the DoD to be transparent and release its data.
At the same time, it would also be good to be able to discuss the important role voluntary protection products, such as GAP waivers, can play for servicemembers buying vehicles, particularly those young servicemembers the CFPB references. GAP waivers can save consumers tens of thousands of dollars in loans that otherwise would weigh on them were their vehicle totaled early in their ownership.
Assisting our servicemembers is a priority for AFSA and its member companies. We stand ready to work with policymakers to address many of these issues, and to serve those who serve our nation with pride and distinction.
July 19th, 2022 by Dan Bucherer