DOD Issues Proposal for Credit to Service Members
April 10, 2007
The Defense Department released proposal to protect service members and their families from potentially abusive lending practices and products. The DOD authority to write rules was part of the John Warner National Defense Act and the rules will go into effect on Oct. 1, 2007. In writing the proposal, DOD said its intent was to limit negative credit practices without impeding the availability of credit that is beneficial to service members and their families. The proposal covers such products as payday loans, vehicle title loans and refund anticipation loans. The plan asks for input in specific areas, for example, DOD would like opinions on whether the final rule should exclude regulated banks, credit unions and saving associations and their subsidiaries from coverage; and whether a duration limit and monetary limit on vehicle title loans would have unintended consequences for other credit products. The department also wants advice on how to encourage lenders to continue to offer responsible, small-dollar loans products for service members. The proposal was issued for a 60-day comment period.