It's a debate about giving more financial freedom to the soldiers charged with defending our freedom . . . Missouri's two main U.S. Senate candidates are locked in a battle over how to best protect military families from predatory loans.
Senator Jim Talent is working on legislation that would limit interest rates charged to soldiers and their spouses for a loan. But his Democratic opponent Claire McCaskill says the plan doesn't go far enough.
This has a lot to do with those payday loan centers you see with flashing lights everywhere. Credit counselors say they've seen *some* charge interest rates ranging from 500 to 800 percent. Senator Talent wants to limit the rate to 36 percent for military personnel. Claire McCaskill says that's still too high.
Payday lending offices surround the military town of St. Robert, Mo. so that's where Senator Talent held a news conference today touting his proposed rate cap. While we made the trip, we unfortunately never got to catch up with the Senator because of an accident in a construction site on Interstate 44 that delayed us an hour and a half. No joke. We sat in traffic for 90 minutes. Such is life.
Fortunately, Consumer Credit Counseling's Landy Dixon, who supports Senator Talent's legislation, waited for us to explain the proposal. Understandably, the junior senator had to move on to tour storm damage in St. Louis.
Dixon says she has seen the payday shops charge rates in the triple-digits regularly. She says Talent's proposal of a flat federal rate of 36% is a good first step.
"I think Senator Talent wanting to do that is a good idea. I just think 36% interest is obscene," McCaskill told me in Louisburg Friday.
McCaskill says she opposes Talent's plan because the 36% rate is still too high. She says she supports restricting the ability of payday shops to offer long-term loans, but questions Talent's motivations.
"Senator Talent is looking after a specific company that has been a Republican contributor," McCaskill told me.
The company she is referring to is the Kansas City-based Pioneer Services, which specializes in military lending. According to the McCaskill camp, Pioneer is also a significant Republican campaign donor. Talent took $2000 from from a top level Pioneer executive, according to a McCaskill release.
McCaskill claims that Talent's legislation would stifle competition and drive soldiers to use the Pioneer group for loans. "This amendment was slipped into a bill and not debated," McCaskill spokeswoman Adrianne Marsh said. "This Pioneer company is the only company in the market to do loans for the military and a very hearty contributor to Sam Graves, the other sponsor. This is one way to protect their contributors," Marsh added.
The Talent camp calls those accusations pure politics.
"It's unfortunate Claire McCaskill is not supportive of Senator Talent's plan to stop predatory lending," campaign spokesman Rich Chrismer said. "Claire McCaskill isn't arguing against Jim Talent on this. She's arguing against every major consumer group that is supporting it. This bill has Democratic, bipartisan support. It's unfortunate she's trying to play politics."
"The payday lenders have also tried to discredit the legislation by suggesting it would help other financial institutions. And, like Claire McCaskill, they have tried to discredit lawmakers who are trying to stop these unscrupulous practices," Chrismer said.
Dixon credits Talent for taking an important first step in protecting military families who are financially vulnerable.
"When service members get in trouble financially, it moves their focus off the mission, now they have to worry about financial problems," Dixon said. "This is just legislation supporting not charging such high interest rates."
McCaskill says she supports a different House bill, which she says has more consumer protections.
"We're not against restricting payday lenders. We just want to make it fair. This bill allows one group to take advantage of the consumer, and eliminates competition," said Marsh.
Marsh also takes issue with the triple digit rates. "Those payday loans aren't intended to go the entire year, they are intended to be paid in the short term. Those short-term rates are averaged out, that's where they are getting those big numbers like 500 and 800 percent," Marsh said.
To which Chrismer responds, "The predatory lenders say there is no such thing as 800 percent APR. What they don't tell you is that they charge a fee for cashing paychecks that can be rolled over from paycheck to paycheck."
Senator Talent's campaign says most consumer groups support his bill and argue that this bill doesn't help any particular lender, but will stop payday lenders trying to take advantage of soldiers. They say McCaskill is just opposing it because he's her opponent.
By the way, Talent's bill has passed the Senate, but not the House yet.
Want more? Here's some links McCaskill's camp have included in their release:
http://www.abcnews.go.com/Politics/wireStory?id=2207597
http://www.nytimes.com/2004/12/07/business/07military.html?pagewanted=1&ei=5088&en=6ce307a53f463076&ex=1260075600&partner=rssnyt
http://www.publicinterestwatch.org/press_6_30_05.htm
Here's more from Talent's side:
http://www.moaa.org/controller.asp?pagename=lac_update_060714
http://www.paydayloaninfo.org/state_detail.cfm?id=MO
http://talent.senate.gov/News/singleNews.cfm?NewsID=1715
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