CFPB Proposes Reporting and Examination Authority Over Military Lending Act

The Consumer Financial Protection Bureau on January 17, 2019, asked Congress to grant the bureau clear authority to supervise compliance-related issues for the Military Lending Act. CFPB Director Kathy Kraninger transmitted a legislative proposal to the speaker of the U.S. House of Representatives and Vice President Pence in his capacity as president of the U.S. Senate. She also shared copies with the chairs and ranking members of the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services, which have had revisions to their membership rolls in recent days.

Currently the Military Lending Act grants enforcement authority to the agencies specified in section 108 of TILA, including the Board of Governors of the Federal Reserve System, the CFPB, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Federal Trade Commission. The proposed legislation would allow the CFPB nonexclusive authority to require reports and conduct examinations specifically focusing on the Military Lending Act among consumer and small loan lenders. In her statement, Director Kraninger stated that, “The Bureau is committed to the financial well-being of America’s service members. This commitment includes ensuring that lenders subject to our jurisdiction comply with the Military Lending Act so our service members and their families are provided with the protections of that law.”

In addition to the legislative proposal introduced by Director Kraninger, the Senate and House of Representatives have each introduced bills to amend the Mortgage Lending Act. The Senate Bill – the Military Lending Improvement Act of 2018 (S. 3334) – was introduced last August and referred to the Committee on Banking, Housing, and Urban Affairs. The bill would, among other things:

  • Extend the Military Lending Act to recently discharged or released members of the armed forces;
  • Lower the maximum authorized annual percentage rate on applicable credit from 36 percent to 24 percent;
  • Extend the coverage of the Military Lending Act to credit for cars and other personal property; and
  • Implement certain privacy protections and provide enhanced protection from debt collector harassment.

The House of Representatives Bill – the Financial Protection for Our Military Families Act (H.R. 442) – was introduced on January 10, 2019, and has been referred to the Committee on Financial Services and the Committee on Armed Services. The bill would explicitly extend CFPB supervisory authority to allow the CFPB to assess compliance with the Military Lending Act with respect to insured depository institutions.