On Tuesday President Obama announced that the Defense Department will expand existing credit protections for troops and families to strengthen protections against predatory lenders.
Speaking to the 116th national convention of the Veterans of Foreign Wars, Obama told attendees that the new rules are part of the ongoing fight “to give our troops … every chance to enjoy the American Dream.”
He noted that there is an existing law, the Military Lending Act of 2006, designed to protect troops and their families against “unscrupulous predatory lenders.”
“But … some of the worst abusers, like payday lenders, are exploiting loopholes to trap our troops in a vicious cycle of crushing debt,” Obama said. “The Defense Department is closing these loopholes so we can protect our men and women in uniform from predatory lenders. It is the right thing to do.”
In a media call with reporters the night before Obama’s speech, administration officials said implementation of the new rules will begin Oct. 1 but will not take effect for troops and families for a year or more. New credit card protections, for example, will not kick in until Oct. 1, 2017.
But when all the new rules are finally in place, they will close loopholes in the original regulations that spun out of the 2006 law, which limited the annual interest rates that service members could be charged to 36 percent.
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