WASHINGTON — Senate Democrats sent a letter Tuesday asking the Consumer Financial Protection Bureau to reinstate examinations of lenders for compliance with the Military Lending Act.
In the letter sent to CFPB Director Kathy Kraninger, Democrats pressed the CFPB to once again allow routine examinations of the MLA at financial firms after the practice had been stopped under former acting Director Mick Mulvaney. They also argued the CFPB already has authority to do the examinations without needing further legislative action — something Kraninger asked Congress for earlier this year.
“We urge you to continue these examinations in order to pursue the clear bipartisan goals of supporting military readiness, saving taxpayer money, and protecting our servicemembers and their families from predatory lenders,” said the letter, signed by 47 Senate Democrats.
The lawmakers asked Kraninger to "provide a full justification of the current CFPB leadership's decision to put servicemembers at risk by failing to do its duty" by Friday, March 8.
The CFPB had performed MLA examinations until November 2018, when Mulvaney reportedly
The Military Lending Act has long been challenging for the consumer bureau because the agency shares authority under the law with the Department of Defense. The bureau has largely overseen compliance with the law's 36% interest rate cap for service members and their families.
Senate Democrats argued that the CFPB has authority to continue examining lenders for compliance under the act because the Dodd-Frank Act gave the bureau overarching authority to protect consumers from risky financial products.
“The CFPB’s existing statutory authorities are more than sufficient to justify including MLA compliance in routine examinations, and to our knowledge, the CFPB's authority in this regard has never been challenged,” the letter said. “In the aftermath of the worst financial crisis in decades where safety and soundness regulators failed to keep a watchful eye over Wall Street and predatory lenders, Congress provided the CFPB with broad powers to protect consumers — with an explicit focus on servicemembers and their families — so that risks could be spotted before they caused irreparable harm.”
