Senate Banking Committee Chairman Sherrod Brown is pressuring the nation's four largest banks to make use of a federal database to determine whether their retail customers qualify for benefits under a law offering financial protections to active-duty service members.
Brown, D-Ohio, sent letters Wednesday to the CEOs of JPMorgan Chase, Bank of America, Citigroup and Wells Fargo, urging them to
That 20-year-old federal law caps the interest rates on loans made prior to military service at 6%, as long as the service member is on active duty.
Brown noted that lenders have the ability to run free checks of a Department of Defense database to determine whether customers are currently on active duty.
"Active duty servicemembers have much on their mind, from deployment, to concerns about leaving their families, to returning home," Brown wrote. "Banks should not place the burden on servicemembers to request protections they are legally entitled to receive."
Brown pointed to a December 2022 report by the Consumer Financial Protection Bureau, which found that fewer than 10% of auto loans taken out by Reserve and National Guard members who were on active duty got interest rate reductions.
The CFPB calculated that Reserve and Guard members who are on active duty pay about $9 million per year in interest that they are not legally required to pay.
Under the Servicemembers Civil Relief Act, service members may qualify for interest rate reductions by providing creditors with written notice of their active-duty status.
In an October 2023 report,
Brown's letters followed a Senate Banking Committee hearing last week where he pressed the CEOs of the country's biggest banks on whether their companies proactively check the database.
During the hearing, JPMorgan Chase CEO Jamie Dimon said he's sure that his bank complies with the law. He also touted JPMorgan's record of hiring military veterans and spouses.
Citigroup CEO Jane Fraser also pointed to her company's record of employing veterans, before adding: "We make extensive investments in ensuring that we comply with the laws, and we do indeed tap into the database."
Bank of America CEO Brian Moynihan said that the Charlotte, North Carolina-based bank follows the provisions of the Servicemembers Civil Relief Act. After receiving notification about service members' active-duty status, BofA sends $180 million back to them annually, he said.
In written testimony, Wells Fargo CEO Charlie Scharf said that the San Francisco-based bank is committed to providing the benefits and protections required by the 2003 law.
