The Talent-Nelson Amendment to the Defense Authorization Bill is in play this week, and the dealing is going thick and fast. The amendment says that lenders cannot charge military families more than 36% interest. If it passes, this would be the first effective usury rate in the US since 1980. The amendment got a big boost in early August when the Department of Defense issued a powerful report calling on Congress to protect military families, citing the need to maintain troop readiness.
Talent, in a close race back in Missouri, doesn’t want to back down. He wants to look like a guy who stands up for the military, and the GOP wants him to look good. So the creditors are starting to get scared that the amendment will stick and that means the banks want to cut a deal. They are willing to toss over their unwaivering objections to any usury laws, evidently admitting some lenders engage in abusive practices. But they claim that those abusive lenders are the OTHER guys, not the banks, so they want a special exception for the banks even if they charge more than 36% interest.
The latest word, according to the banks, is that the bill may have unintended consequences of scooping in credit card loans that exceed 36% in annual interest. So they want a special bank exception. In effect, they want the bill to say that payday lenders can’t skin military families, but banks can. Regulate who does the bad act, not the bad act itself.
All the dealing is on the quiet. Banks don’t want to oppose the bill publicly and be branded anti-military. But they are sweating over two aspects of the bill: First, the banks might have to cut back on what they charge military families on credit cards and subprime car loans. Second, the banks may have to live with new scrutiny as they try to explain why other families don’t deserve the same protection. Why should the elderly or students or just plain old middle class families be subject to such abuses?
Could the Talent-Nelson amendment be the hole in the dike that has held back consumer protection for twenty-six years? The consumer groups and veteran groups are holding firm: the same rules should apply to every lender payday lenders and banks. Either it is OK to charge military families this much money or it is not, and it doesn’t matter who does it.
The banks are not without friends. Representative Geoff Davis (a pun on Jeff Davis?), R-Ky, is reported to be doing his best to gut the Talent amendment. So far, however, he hasn’t succeeded. That leaves the bank lobbyists crying that Talent isn’t being flexible.
House and Senate conference negotiators (the Talent amendment is in bill that passed the Senate but not the House version) say they will wrap it up this week. Will the banks get a deal? Or will they be held to the same rules as the payday lenders when they take advantage of military families?
