According to the AP, Servicemembers and their dependents could pay no more than 36 percent annual interest on payday loans, vehicle title loans and refund anticipation loans under a preliminary draft of a law intended to stop high-interest loans to the military.
The U.S. Department of Defense's draft proposal, a copy of which was obtained by The Associated Press on Tuesday, was a blessing for banking and consumer lending groups that had feared the law would be interpreted so broadly that it would include many common practices such as credit cards, overdraft protection on checking accounts and direct bill payment.
The draft will be published Wednesday in the Federal Registrar, and the public will have 60 days to comment before it is finalized and goes into effect Oct. 1.
"I think we're both on the same wavelength that we want the bad practices to end and we don't want military families to become second-class financial customers," said Wayne A. Abernathy, executive director of financial institutions policy and regulatory affairs for the American Bankers Association.
Congress placed the APR cap on all consumer credit loans last year, giving the Department of Defense the job of deciding what practices fell under Congress' definition of "consumer credit."
Most of the debate before Congress focused on payday lenders, which offer small-scale, short-term loans for a fee that customers must repay when they receive their next paycheck. Borrowers who cannot settle up at payday often "roll over" the loan repeatedly, leading to more charges that quickly add up.
Most payday lenders charge around $15 per $100 borrowed, pushing annual interest rates on two-week loans close to 400 percent. A 36 percent cap would limit fees to $1.38 for each $100 borrowed.
"We're not going to make loans at $1.38, so on the effective date there won't be payday loans available to military people," said Steven Schlein, a spokesman for the Community Financial Services Association, an industry trade group.
"Military personnel deserve the same financial choices as any other citizens."
Several groups, including the National Military Family Association, say credit cards, overdraft protection charges and other high cost lending practices are also detrimental and should be included.
The draft left open the option for Congress to go back and add other lending practices.
According to the Center for Responsible Lending, National civil rights groups, including the Leadership Conference on Civil Rights, the NAACP, the National Fair Housing Alliance, the National Council of La Raza, and the Center for Responsible Lending called today for mortgage lenders, loan servicers and loan investors to institute an immediate six-month moratorium on subprime home foreclosures resulting from reckless and unaffordable loans in the subprime market.
According to the AP, recognition has been a long time coming for Milton Crenshaw and other members of the Tuskegee Airmen, the first all-black unit in the Army Air Corps.
According to Inc.com, a House committee this week approved a $1.3 billion bipartisan tax package for small businesses aimed at boosting support for an increase in the federal minimum wage.
According to the Business Wire, Merrill Lynch & Co., Inc. (NYSE: MER) today announced that Harold E. Ford, Jr., former congressman, Ninth District of Tennessee, will join the company as vice chairman and senior policy advisor, effective March 5. Mr. Ford will advise senior management on domestic policy issues, serve as a member of the firm's public policy and social responsibility management committee, and support a variety of business development initiatives in the institutional and retail markets. He will report to Greg Fleming, president of the firm's Global Markets and Investment Banking group and maintain offices in New York and Nashville, Tenn.
Black Entertainment Television founder Bob Johnson says his new bank holding company, Urban Trust Bank Holdings, has created a student loan company he hopes will become the nation's premier minority-controlled student loan provider.
Investor Robert Johnson's Urban Trust Bank has entered into an agreement to put its branches in Wal-Mart stores in the Washington area and beyond.
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