ST. LOUIS-Last week, credit union representatives explained at a congressional roundtable how credit unions are helping fight the battle against predatory lenders. House Small Business Rural Enterprises, Agriculture, and Technology Subcommittee Chairman Sam Graves (R-Mo.), who called the roundtable during the Congress’ spring recess, has introduced the Servicemembers Anti-Predatory Lending Protection Act (H.R. 97). The bill would limit creditors charging more than 36% for consumer credit to the military or their dependents, provide for mandatory loan disclosures, prohibit rollovers, preempt state usury laws, and prescribe penalties such as fines and up to one year in jail. “Predatory lending in any form is unacceptable to the credit union community and NAFCU disapproves of any practices that take advantage of uninformed and unwary consumers by subjecting them to deception, misleading and incomplete information, falsifications, or outright fraud,” Arkansas Federal Credit Union CEO Hank Klein’s written comments stated. He testified on behalf of NAFCU. Klein noted a study that his credit union, which serves a number of military bases, performed which discovered many of the payday and predatory lenders operating in its area were “unlicensed and unregulated.” There were more payday lending outlets than McDonald’s restaurants in some cities. “Furthermore, a disturbing trend emerged-the lower the median income level of the city, the higher the number of predatory lenders in the city, reaffirming what many studies have found-payday lenders prey on the military and lower income consumers who can least afford the service,” Klein’s testimony read. He cited a 2003 National Consumer Law Center study that found predatory lenders targeting military personnel because “deployment overseas can make families vulnerable, and that military codes stressing orderly finances may inadvertently be driving some toward the quick fixes predatory lenders offer. The study also noted that some military leaders are concerned that financial stress from scams and predatory practices could have an impact on readiness.” But, credit unions have a presence on nearly every military installation in the U.S., according to Klein. He noted that Navy Federal Credit Union operates branches overseas with extended hours, as well as phone and Internet access, despite the profitability or lack thereof. Pentagon Federal Credit Union counsels those service personnel most at-risk and offers short-term loans to members at nominal interest. Arkansas Federal Credit Union provides a number of services to combat predatory lenders, from small, unsecured loans to fee-free checking, as well as financial education. Missouri Credit Union Association CEO Rosie Holub also testified at the hearing pointing to exorbitant interest rates charged by some predatory lenders, reaching over 1,000%; she noted that Missouri has no usury cap. Holub also explained that Missouri credit unions are asking Governor Matt Blunt to proclaim August 2005 Credit Union Financial Literacy Month, when credit unions work in the communities, schools and with their members to help them make better financial choices. “Only when consumers are educated about the realities of predatory lending practices can they make sound choices,” her talking points said. -

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