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By Irene
Brown, Chief Command Information
WEST POINT,
N.Y. (Pointer View, February 10, 2006) — The military is
preparing to fight a new enemy surrounding its installations and
drowning young servicemembers in a sea of debt.
Along
suburban roads, in shopping centers and on downtown blocks,
payday loan stores have a message that is hard to miss: CASH
NOW!.
Since the
first store opened in 1993, payday lenders have multiplied
rapidly, nourished by the fact that many people need money fast.
In just 12
years, more than 22,000 payday loans stores have opened in 40
states. Their total estimated annual loan volume? More than $40
billion in 2003 alone.
Payday
lenders get their name from the practice of giving small loans
to people expected to repay them at their next payday.
Typically, lenders charge $15 per $100 lent.
More and more
of these establishments are cropping up around military posts
nationwide. After all, when you can charge 391 percent interest
on a two-week, $500 loan, what better place to open than near a
base full of young enlistees often desperate for cash.
According to
statistics from the Bureau of Financial Institutions, payday
loans totaled close to $1 billion last year. What’s more, nearly
a quarter of borrowers took out 13 or more such loans in one
year. Those individuals live from week to week, using one
paycheck to pay off the old loan and quickly acquiring another
loan to meet a new month’s bills.
Meanwhile,
the astronomical interest charges lessen whatever hope they have
of ever getting ahead.
The
Department of Defense launched a new effort in June to educate
its servicemembers about the dangers of borrowing from
“loan-shark” lending companies.
Defense
department officials said they are taking steps, such as hosting
fairs at military installations, to let military members know
about the dangers of payday loans and familiarize them with ways
to put themselves and their families on a sound financial
footing.
Rear Adm.
William French, the Navy’s northwest commander, has also taken
up the cause. Many of his sailors, he said, are adrift in a sea
of debt, often at the mercy of payday lenders. And they are
consumed by their struggles to make ends meet.
“They are
distracted and could put themselves and their shipmates in a
potential position where they could be hurt or killed,” said
French, who is urging lawmakers to institute harsher
restrictions on the payday loan industry.
Congress is
responding. Representative Darlene Fairley of Washington has
sponsored a bill seeking to cap annual interest at 36 percent,
limit borrowers to one $500 obligation at a time, and prohibit a
lender from giving loans to a borrower’s spouse. In the state of
Washington there are roughly 711 payday lending shops. Under the
new restrictions, lenders that specialize in short-term,
high-risk loans would only make 10 cents per day on a two-week
loan of $100.
This lending
practice has so adversely affected military members that the
Department of Defense recently listed payday lending as one of
the top 10 issues facing military families.
“Twenty
percent of active-duty personnel used a payday loan last year,”
DOD officials said. “This is a problem that hasn’t gone away and
one we need more help with.” |
BLACKHAWK TACTICAL GEAR
