WASHINGTON–The Trump Administration is seeking to suspend routine examinations of lenders for violations of the Military Lending Act, according to a new report.
Supervisory examinations of lenders for compliance with the MLA, which was devised to protect military service members and their families from financial fraud, predatory loans and credit card gouging, will be scrapped according to internal documents reviewed by the New York Times.
Mick Mulvaney, the interim director of the Bureau of Consumer Financial Protection, has argued that such proactive oversight is not explicitly laid out in the MLA, according to a two-page draft of the change, the Times reported.
“The proposal surprised advocates for military families, who have urged the government to use its powers to crack down harder on unscrupulous lenders,” the Times said. “The consumer bureau conducted dozens of investigations into payday and other lenders during the Obama administration without any significant legal opposition, and no lenders are currently challenging its oversight based on the law, according to administration officials.”
The Times reported that the Bureau will still bring individual cases against lenders who are found to charge in excess of the annual interest rate cap of 36% mandated under the law, and continue to supervise lenders under other statutes.
Previous Efforts ‘Overly Aggressive’
“But it will scrap supervisory examinations, which are the most powerful tool for proactively uncovering abuses and patterns of illegal practices by companies suspected of wrongdoing, former consumer bureau enforcement officials said,” the Times reported.
John Czwartacki, a spokesperson for Mulvaney, told the Times the rule change came from a top-to-bottom review of the Bureau’s procedures geared at curtailing what the administration, along with lending industry executives, have criticized as overly aggressive enforcement by the Bureau’s first director, Richard Cordray.
Since its creation under the Obama administration in 2011, the consumer agency has returned more than $130 million to service members, veterans and their families and handled more than 72,000 complaints per year, according to the agency.