Ad States Kentucky Candidate Would Let Payday Lenders Prey on Military Families
Inside Subprime: Oct 9, 2018
By Lindsay Frankel
A September political ad in Kentucky has claimed that Republican candidate Andy Barr received campaign donations from organizations associated with the payday lending industry while allowing payday loan providers to financially harm military families. Barr’s campaign called the ad misleading in a statement, pointing to Congressman Barr’s history of actions that have benefited veterans. But the ad is supported by cross-partisan organization, With Honor, which is dedicated to electing veterans to heal a dysfunctional Congress. The group has backed Democratic candidate Amy McGrath, a Marine veteran.
The ad states that Barr took “$36,550 from payday lenders, then let them stick our troops with outrageous fees. It’s what’s wrong with Congress.” The statement is complicated, since Barr never voted to repeal the Military Lending Act, which caps interest rates at 36 percent for active military members. However he did vote for the 2017 Financial CHOICE Act, which ended up failing in the Senate. In fact, he was one of the original cosponsors. The legislation would have weakened the authority of the Consumer Financial Protection Bureau, which has been instrumental in “providing restitution and help to troops taken advantage of by illegal financial practices,” according to Military.com.
The bill stated that “the agency may not exercise any rulemaking, enforcement, or other authority with respect to payday loans, vehicle title loans, or other similar loans.’’ While some states have consumer protections in place that place limits on interest and fees, payday lenders in many other states charge exorbitant interest and fees that make it difficult for borrowers to pay back their loans in the allotted period. This leads to a cycle of debt that is difficult to overcome. Payday loans in Kentucky have particularly high interest rates, costing borrows an average of 469 percent annually, according to Pew.
While the bill would not have repealed protections for active duty military, it may have made it more difficult for military members to file complaints and receive restitution. According to a 2017 CFPB report, a program in the bureau’s Office of Servicemember Affairs department received more than 74,000 complaints about predatory lenders from military members since 2011. Affected members of the community received over $130 million in relief through the program.
It may have been misleading to suggest that Barr would let payday lenders take advantage of our troops, but the ad’s statement about Barr’s acceptance of political donations was accurate. Barr has received $36,550 since 2014 from PACs and individuals who support the payday lending industry, according to the Center for Responsive Politics.
It’s not clear whether the donations were connected to Barr’s political actions, but Barr did vote to weaken the CFPB’s authority over payday lenders, which could have impacted military families indirectly. Whether the ad is completely accurate or not, Barr’s vote would have loosened consumer protections and left many people vulnerable to predatory lenders.