The Consumer Financial Protection Bureau’s new leadership asked Congress Thursday to give it more power to prohibit lenders from charging military members and their families very high interest rates, a move that may soften criticism from congressional Democrats of the bureau’s handling of military lending.
The agency’s role in protecting service members from high-interest loans has been the source of controversy since last year, when then-acting director Mick Mulvaney suspended examinations of companies that lend to military members, arguing that the bureau didn’t have legal authority to conduct the proactive reviews under the relevant law, the Military Lending Act. Mulvaney suggested that Congress should pass a new law to clarify the bureau’s powers, and the agency on Thursday formally submitted a request for legislation.
“The Bureau is committed to the financial well-being of America’s service members,” CFPB Director Kathy Kraninger said in a release announcing the request. “This commitment includes ensuring that lenders subject to our jurisdiction comply with the Military Lending Act so our service members and their families are provided with the protections of that law. That’s why I have asked Congress to explicitly grant the Bureau authority to conduct examinations specifically intended to review compliance with the MLA.”
The CFPB drafted, and on Thursday published and sent, legislative language to the relevant House and Senate committees that the bureau argues would once again allow it to conduct proactive examinations.
The Military Lending Act prohibits certain personal loans with annual percentage rates above 36 percent. The bureau is requesting that it is allowed to demand information from nonbanks that lend to military personnel and their families for the purposes of enforcing the law. The bureau did request information from nonbanks prior to Mulvaney’s tenure, but it now relies on reporting of violations for enforcement action rather than proactive examinations.
Democrats in the House and Senate decried the change in interpretation of the law under Mulvaney, who now serves as the acting White House chief of staff in addition to his role as the Trump administration’s budget head. They argued that the CFPB would not be able to monitor lending to the military effectively without actively monitoring firms. The topic could be on the agenda if Mulvaney testifies about his tenure overseeing the bureau before the House Financial Services Committee as its chairwoman, Rep. Maxine Waters D-Calif., wants him to.
