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August 31, 2006

Supporting The Troops?

You know, just the other day I was riding around town, luxuriating in the moral superiority conferred by my "Support The Troops" magnetic bumper attachment (a sticker implies too much investment) and thinking about how much my decorative encouragement must mean to the men and women of our fighting forces. And yet, somehow, when I read that nearly 20 percent of our soldiers are being preyed on by predatory lending operations set up near bases, I wonder if I might need, I don't know, another bumper magnet.

Predatory lenders are generally a problem in poor urban areas where reputable banks don't see the sort of profit margins that justify a branch. But capitalism abhors a vacuum and folks still need loans, wire services, money orders, and all the rest, so small lenders charging insane rates flow into the gap. That's a large part of what folks like John Edwards mean when they say "it's expensive to be poor," small loans and advances that respectable banks and good credit ratings make trivial for the rich become economically dangerous and costly for the working class.

These payday loan stores are increasingly becoming a problem near military bases, too, where soldiers seeking an advance on their (paltry) paychecks or a loan to fix their car are being charged exorbitant rates. The issue grew so acute that Congress commissioned a study on the rates. The researchers found that soldiers are being charged $15-$25 for a two week, $100 loan, and annual rates of up to -- ready for this? -- 780 percent. The average borrower pays backs a total of $834 on a $339 loan, and the debt problems can grow so urgent that they lose their security clearances (assumedly under the rationale that debt renders one susceptible to bribery).

So we have two forces at play here: The first is that we pay our service members so little they're forced to enter into debt if they want a chance at middle class lifestyles. The second is that we sequester them on remote bases, where the financial options often fleece them. This must be really demoralizing for our troops. I might need more than a second bumper magnet; this might require a miniature American flag, too.

Crossposted at Crooks And Liars -- I know, I'm switching it up.

August 31, 2006 | Permalink



Posted by: WW-3 | Aug 31, 2006 11:57:37 AM

Man, that amount of caps lock is so unnecessary.

Posted by: Ezra | Aug 31, 2006 12:02:58 PM

When I was in the Army, it was one of our biggest complaints from our company commander and First Sergeant. I can't begin to tell you how many times soldiers were called in because of these types of lenders calling the unit and complaining about a late payment.

Back then, they could not garnish a soldiers pay, but from what I understand now, they can. Teh only other solution then was Army Emergency Relief (AER) and most of the time you can only use them once for a loan and of course they yank it out of your pay immediately.

Maybe congress should look at a pay raise for the troops, instead of another for the ones to chicken shit to fight.

Just a thought...

Posted by: Ricky Bones | Aug 31, 2006 12:10:28 PM

Could soldiers, or other gov't employees, set up some kind of credit union? Or are there some kind of obstacles to that.

Part of the problem might be, for all we respect them, soldiering as practiced is some kind of temporary, transient labor. Credit unions I think are based on the premise that an employee will be around, same place same job, for five years or more.

Posted by: bob mcmanus | Aug 31, 2006 12:17:03 PM

Another recent example of this kind of predation on members of the military, this time with investments, was halted recently by the Securities and Exchange Commission.

I'd bet a month's salary that every one of these crooks at the insurance company's Waco HQ had "support the troops" magnets and "W" stickers on their Hummers.

Posted by: Deedle | Aug 31, 2006 12:27:26 PM

Wow.. military people make plenty of money. I've known, partied with, and hung around military people, both enlisted and officers. They don't do too badly. Certainly not going to be driving a beamer around normally, but theres no shortage of funding for anyone thats not just blowing it all.

Even if they do blow it all, they have no expenses! Health, utilities, food, rent, all these things are taken care of. (Im talking of course about those who live on base, since you were concerned with the lending institutions near bases.)

The net effect of raising their pay would be an increase in beer consumption and purchases of big screen TVs. I doubt the use of 'payday loans' would go down because its not a matter of not having enough to live, its about spending more then they make.

A habit of living beyond our means is the problem, for the entire nation. Companies are learning to capitolize on that, and ways to keep people dependant on the system. We really need to put limits on the amounts tat these business can charge for simple lending instead of giving our military members more mad money.

..and yes I do like the military, support the troops, and all that blah. ..but get real these people live pretty well, and its not supposed to be club med.

Posted by: david b | Aug 31, 2006 12:58:06 PM

Usury is a big problem. It makes the WalMart issue pale in comparison. At least with WalMart there are significant and lasting benefits to workers and consumers, as well as corporate owners. Usury siphons money from those that have the least, provides a temporary and illusory benefit to the borrower, and has tremendous disadvantages. Unfortunately, lenders have a disproportionate amount of influence with our politicians.

Posted by: slickdpdx | Aug 31, 2006 1:04:48 PM

"Could soldiers, or other gov't employees, set up some kind of credit union?"

-yes there are various groups like that.

USAA works on credit, insurance, loans and other things for military members. Then there are more local credit unions like http://www.macfcu.org/ that serves Ft Wainright in Alaska.

..another point for the thought that the military people getting into trouble with payday loan companies arent exactly financial wizards.

Posted by: david b | Aug 31, 2006 1:05:35 PM

Even if they do blow it all, they have no expenses!

Obviously you have no military experience. Raising a family on military pay is no easy job. Groceries, gas, clothes, etc are not free, some medical expenses are not covered by the military plan.

Posted by: CParis | Aug 31, 2006 1:09:53 PM

It's folks like those selfish Massachusetts Reservists, who refuse to make sacrifices, that are bleeding the coffers dry. Why do they hate us?

Posted by: Gen Sterling Price (ret) | Aug 31, 2006 1:22:27 PM

My experience with military folk, etc. is overseas only (that gig in Tokyo with Stripes), so I have no idea if these things work differently stateside, but ...

You've got a lot of young people who've never had $1000 in their pockets before and few expenses. They proceed to spend that $1000 like there's no tomorrow. Then they get married and get some expenses, yet continue to spend like there's no tomorrow.

The military doesn't help matters much by taunting servicemembers with high-ticket electronics (gigantic plasma tvs, $2000 Bose speakers), fancy cars, 1000s of DVDs and videogames for sale, etc. on base through the exchange stores. Not all our servicemembers have the protective gear they need, but I'm willing to bet they had all this shit in the Green Zone about five seconds after they put up the fences.

In addition to compensating servicemembers at a higher rate, what the military should do is require some financial management training in boot camp --along with all the other "survivial" skills they teach.

Posted by: Roxanne | Aug 31, 2006 1:27:36 PM

I remember being shocked when I was working in a Navy town and found out that many of the Navy enlisted families were eligible for food stamps. Note to david b above: yes,officers are paid fairly well (my husband was one), but enlisted men aren't paid well at all: in particular, not enough to support a family. As Ezra suggests, this is a disgrace. And I've certainly seen all the predatory lenders around the bases in my area. I read recently in our local paper that the Army was complaining about this, but of course our current administration and Congress are much more concerned about the financial well-being of the lenders than that of the troops. This is just one of many examples that shows that the right-wing's "support the troops" talk is just that, talk. What they really want is for the country to support the POLICY (endless wars of choice), but it sounds better to call for support for the troops.

Posted by: Rebecca Allen, PhD, ARNP | Aug 31, 2006 1:48:56 PM

This is a good example of how Republicans fight crime, in this case loansharking. First, accept a bunch of money from loansharks then pass a law making it legal. See- problem solved! If there's a buck to be made, you can count on Repugs to be there, hand out, despite how morally repugnant the law is. Their ideology is FuckEveryoneButMeAndMine, especially if they can profit from it. And let's not forget there were quite a few vichy Dems signing on to the Bankruptcy bill too. This nation needs people like Edwards and Kennedy, who are willing to stand up and do The Right Thing. I would like to see a law passed so that all loan rates are no more than 12%...period... and NO ONE (state laws included) is able to charge more than that (fees included).

Posted by: Robert M | Aug 31, 2006 1:53:46 PM

"I would like to see a law passed so that all loan rates are no more than 12%...period..."

That would be a bad idea. Well, let me clarify - it wouldn't be a bad idea RIGHT NOW, with low interest rates. But in 10 years when the housing bubble bursts and interest rates double, I don't want to see the banking industry legislated out of existence.

A more reasonable idea is that no loan of any kind be allowed to charge more than some multiple of the prime rate. The big issue is that these payday loan places skirt most anti-usury laws by being fixed term rather than indefinite - since they do not offer credit for an extended period of time, they're allowed to charge 800% APR. Simply forcing them to play by the same rules as banks would solve a lot of the problems.

Posted by: Kylroy | Aug 31, 2006 2:15:31 PM

Give me a break.. my father was in the army as well. In the 50's before life got all cushy for the US military. They didnt live in nice houses with most comforts of home. While in Texas they lived in small cinder block apartments with no AC. While in Germany things were upgraded, because they lived in old german luftwaffe housing, still no swank place either.

There is no group of people that say raising a family is easy. The military does upgrade pay and housing opportunities for those that are married, and for those that have kids. Is it like having a nice cushy job with all the perks? No it isnt, nor should it be.

So much for the spartan warrior lifestyle..

Your complaining about the cost of gas? Join the rest of the country. Exactly how much of a commute is it from the barracks to the parade ground? Or are you more concerned about paying for gas between home and Blockbuster in a nice SUV getting 12 mpg? Its not about enough pay, its about reasonable expectations, and having a taste for high living that shouldnt be being paid for by the US military.

Posted by: david b | Aug 31, 2006 2:21:56 PM

USAA works on credit, insurance, loans and other things for military members.

Children of servicepeople are also eligible for USAA membership even into their independent adulthood, and they offer good rates and, even harder to find these days, excellent customer service.

Posted by: Hamilton Lovecraft | Aug 31, 2006 2:22:57 PM

some more things I noticed..

"Groceries, gas, clothes, etc are not FREE, SOME medical expenses are not covered" - emphasis added.

Cry me a river. Want to compare prices of food at the PX and safeway or a department store... or a bottle of wine, or fatigues? How bout the high price of riding a military transport to visit home for the holidays compared to a ticket on any major airline? The price of dental work or going to the doc on base compared to getting an appointment in town?

Fact is that these people dont have many of the expenses that civilians take for granted, and the ones that they do have are often quite discounted.

There is an argument to be made about compensation and the ability of the military to entice volunteerism. The idea that what they currently make is not enough to 'make it' is not valid.

Posted by: david b | Aug 31, 2006 2:32:29 PM

david b,

Wow, that's pretty bitter. Perhaps you should work on whatever it is that you actually resent instead of taking it out on the military. Or you could enlist and partake of the cushy lifestyle yourself.

Or you could stop acting like an asshole. That's what's great about this country, there's always choices.

Posted by: Stephen | Aug 31, 2006 2:36:03 PM

..been there done that. Its not so great.. its also not so bad, and you can certainly live on what you make. Not to mention the GIB which is currently funding my attempt at a degree.

Its not bitterness, its a statement of facts. These people feel sorry for themselves when they have it better then anyone else in the world in a similar situation.

Posted by: david b | Aug 31, 2006 2:42:34 PM

I do also find it fairly gratifying that the best argument you can come up with against my examples is .. name calling. Very sophisticated.

Posted by: david b | Aug 31, 2006 2:44:08 PM

Based on the comments of the few of the posters here, it sounds like the only ones who will be able to afford to serve in the military will be trust-fund babies. I'm looking forward to the Bush twins, Jeb's spawn, Paris Hilton, etc dodging IEDs while defending our country.

Posted by: CParis | Aug 31, 2006 3:41:08 PM

Two points; yes, a single dude with few obligations can do ok in the service. Even the roughest quarters are quite tolerable to a young man on his own, and the pay is pretty decent compared to other gigs a young man with not much education would likely have.
But alot of servicemen/women these days arrive for duty with spouses, very young children and many financial obligations. It can be extraordinarily rough for these people, and usually is.
Housing overseas for a family man in the military can be outrageous. A tiny ratted out apartment in Seoul, for instance, usually takes every penny of an officer's housing allowance.

Posted by: sprocket | Aug 31, 2006 5:11:55 PM

I refused to put a sticker with 'support our troops'. I support them - period - and I don't need a sticker to prove it. I did, however, put a sticker on that states: Question War which I purchased at: www.questionwar.com. Of course there are those who say that isn't supporting our troops and I say that sending them off to be shot at, duped by their president certainly isn't supporting the lives of our troops.

Posted by: kclaf | Aug 31, 2006 5:23:46 PM

On the predatory lending issue itself, institutional support for credit unions could well go a long way.

The reason that military bases attract predatory lenders is because they are so darn attractive. Think about it: a large number of people receiving pay on a regular basis that have formal fixed term contracts for employment paid by an employer whose checks cannot bounce

And given the bread and butter of credit unions in car loans, personal loans, and Christmas Club savings, the same features make for good conditions for thriving Credit Unions.

The primary institutional support would be to have a point in the induction process where recruits are told that they can join the Credit Union if they wish, have their pay automatically deposited to a Credit Union account, and its a good way to get a good rate on car loans. And of course institutional support for ensuring that automatic loan repayments are transportable from base to base.

Posted by: BruceMcF | Aug 31, 2006 8:08:15 PM

I do also find it fairly gratifying that the best argument you can come up with against my examples is .. name calling.

Well, you caught me. Your comments are so important to me that I used meditation to send my brain into hyperactivity in order to spend the equivalent of months of study and consideration in a few short minutes, all so I could reply to you with the most thought out, best argument possible.

But I guess you're right. The problem is that soldiers today are softer and dumber than those of years past, and anyone who can get away with taking advantage of their youth and/or inexperience should be applauded.

BTW, I didn't call you any names. I didn't say you are an asshole, only that you are acting like one, leaving open the possibility that you could change your behavior.

Posted by: Stephen | Aug 31, 2006 9:14:15 PM

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