Payday lenders are jeopardizing national security by trapping military families into outrageous interest rates that send families into debt, U.S. Senator Jim Talent said Thursday during a visit to VFW Post 5896 in Farmington.
As a result, thousands of military members lose or cannot obtain security clearance, Talent said.
The U.S. senator has cosponsored an amendment to the Defense Authorization Bill that would limit the Annual Percentage Rate (APR) that payday lenders can charge soldiers and their spouses for a loan. In some cases, Talent said, lenders are charging active duty service members more than 800 percent APR on a loan.
Many of the men and women targeted by the payday lenders are young military personnel who have trouble paying back the sky-high interest loans.
&#8220Thousands of service men and women can’t get security clearance because of the payday loans,” Talent said. &#8220Fifty-four hundred sailors and Marines have lost their security clearance, mostly because of financial reasons.
Talent said he would like to pass a &#8220predatory lending” measure that would address payday loans for nonmilitary persons as well. Because his proposed amendment is part of a military defense bill, Talent said he could only focus only on the impact on the military.
That impact, he said, is jeopardizing national security.
&#8220The Department of Defense has even said that service member debt resulting from predatory practices directly impacts troop readiness,” according to Talent. &#8220We have to step in and stop these predatory lenders from making a quick buck at the expense of the livelihood and future of those defending our freedom.”
Talent said that a coalition of more than 70 veterans, civil rights and consumer organizations support his bipartisan amendment. The bill would not affect &#8220credible” lending institutions that assign reasonable interest rates, he added.
Missouri has a relatively large number and high density of payday lenders around Fort Leonard Wood in Pulaski County, Talent pointed out. He said that St. Robert, a small town near the base has only 5,200 residents, but there are eight payday lenders in town.
&#8220This predatory lending is a curse everywhere,” he said. &#8220The problem is growing.”