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California Lawmakers Reject Predatory Lending Protection Bill
Sacramento, Calif. (Aug. 23, 2006) - Commander, Navy Region Southwest Rear Adm. Len R. Hering Sr. speaks to reporters during a press conference for assembly bill (AB) 1965 at the California State Capitol building. AB 1965 is a proposal to help stop predatory lending practices such as charging service members high interest rates on short-term loans. A survey by the Defense Manpower Data Center showed that 13 percent of Sailors have used predatory loans in the last 12 months, where interest rates can exceed 1,000 percent and cost military members and their families more than $80 million in yearly fees. (U.S. Navy photo by Mass Communication Specialist 3rd Class S. C. Irwin)
By Mass Communication Specialist 3rd Class S. C. Irwin, Fleet Public Affairs Center, Pacific, 9/08/2006

SAN DIEGO (NNS) -- Navy officials said they will continue to pursue predatory lending legislation after California lawmakers significantly weakened language and then voted against Assembly Bill (AB) 1965 on the last day of session, Aug. 31.

Lawmakers in the California Senate rejected a bill that proposed a 36 percent rate cap for payday loans, deferral of payments while deployed and a grace period for up to 30 days upon a service member returning from a deployment.

“If you [a civilian] choose to find yourself in this situation, your job is not at risk, national security is not in jeopardy,” said Rear Adm. Len R. Hering Sr., commander, Navy Region Southwest. “While you are an active member of the military, if you find yourself in this situation, your job is at risk, your security clearances are removed, your livelihood is impacted and more importantly, the judicial system Uniform Code of Military Conduct will hold that individual accountable, and that is a protection we need to make sure exists in these types of legislations.”

A recent survey by the Defense Manpower Data Center indicated that 13 percent of Sailors have used predatory loans in the past 12 months, where interest rates can surpass 1,000 percent and cost military members and their families more than $80 million in yearly fees.

High-ranking officers from all military branches supported the legislation that restricted loan rates, provided service members deployed overseas with more time to repay debts and blocked companies from using military emblems as advertising.

“Any member of the military stationed here in California faces financial stress and some members have to address those with two jobs,” said Capt. Mark Patton, commanding officer of Naval Base Point Loma. “The message we need to get across to our uniformed folks here is that they have a lot of options available to them. The fact that you wear a uniform and you are active duty, serving our country, gives you special rights and privileges when in financial difficulty that many don’t understand.”

During a press conference held at the California State Capitol building Aug. 24, Assemblyman Ted Lieu (D-Torrance) said predatory lending practices keep service members in a cycle of debt and disrupt their ability to perform in the workplace.

“The Department of Defense has identified that payday-loan companies are targeting military personnel, and that’s affecting our military readiness and undermining our morale,” said Lieu, who authored AB 1965. “And so, what the bill does is provide protections to military members when they take out payday loans. AB 1965 targets a very serious problem and I’ll try to introduce the bill again six months from now.”

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