Oceanside can help defend Marines

By: North County Times Opinion staff | Tuesday, September 18, 2007 8:58 PM PDT ∞

Our view: City Council should enlist in fight against predatory payday loan businesses

The men and women serving our country in uniform are many things -- brave, dutiful, tenacious, fierce -- but many, especially the younger recruits, lack financial savvy. We need our troops focused on training here in San Diego County, and on battle overseas -- and not on personal and household debt.

Thus we support the proposed ordinance to increase regulation on payday loan centers coming before the Oceanside City Council tonight. While the Marines of Camp Pendleton deserve access to the financial options available to us all, the clusters of nearby businesses tempting them with small loans with big interest rates and bigger penalties can and should to be policed more closely. After all, it isn't just service members' peace of mind at stake, but their ability to wage war and protect peace, as well.

Meager paychecks, mixed with youth and the live-for-today attitude often adopted by men and women rotating in and out of war, make our troops attractive targets to all kinds of easy-money scams. Among them are the payday loan centers that advance customers small amounts of money at exorbitant fees and rapidly escalating interest rates.

Military personnel aren't the only Americans battling bad credit and compounding debt, of course, but their struggles pose a unique threat to national security.

For instance, under Navy rules, sailors whose debts are more than 30 percent of their income cannot be sent overseas. As of last year, the number of sailors and Marines since 2000 who could not deploy because of financial problems had soared 1,600 percent. In 2005 alone, 2,000 sailors had their security clearances denied or revoked because of financial difficulties, and the trend is the same for other armed services.

Payday loans are a big part of the problem. The Department of Defense cites studies showing that far more payday loan businesses concentrate in communities near military bases than comparable cities without a base nearby. Oceanside has at least 22 licensed payday lenders, about 17 more than a city of a similar size would likely have, according to the Pentagon.

And while representatives of the payday loan industry say that only a small percentage -- 4 percent or less -- of their customers are active-duty military, that figure doesn't account for their concentration outside the base gates nor accurately reflect the extent to which military families rely upon their services.

Using the industry's own data, the Pentagon estimated that 225,000 service members, or 17 percent of the military, use payday loans.

That's what prompted Maj. Gen. Michael R. Lehnert, commanding general of Marine Corps Installations West, to implore the Oceanside council to help defend against predatory payday lenders nine months ago.

The ordinance Oceanside's council will consider tonight would change the city's zoning laws so that payday loan/paycheck advance establishments would be treated like adult book stores or liquor stores, not banks. The city would gain the right to limit where payday loan stores could be located.

Of course, regulating the number and location of payday loan businesses will not solve the problem. From credit cards to auto loans, rent-to-own to subprime mortgages, there's no shortage of opportunities for young, financially naive sailors and Marines to get in over their heads.

Oceanside's action follows efforts at the state and federal levels.

California limits cash advance loans to $300 and fees to a maximum of 15 percent, but the annualized interest rate on two-week loans can and often does reach upward of 400 percent. Attempts to strengthen regulations have been consistently thwarted. The state Department of Corporations does offer an education campaign called Troops Against Predatory Scams .

More significant is a federal law set to take effect Oct. 1, which will cap the annual interest that payday loan operators can charge members of the military at 36 percent. The Wall Street Journal says this restriction will limit what lenders can charge to no more than $1.38 in interest and fees for every two-week, $100 loan, a rate at which industry experts say they can't make a profit. That will almost certainly do more to halt the growth of payday loan centers in military towns like Oceanside than anything attempted by the City Council.

But the problem is not going to disappear overnight. As a military town that has greatly benefited from its proximity to Camp Pendleton, Oceanside has a duty to help the Marines defend against predatory lenders. This ordinance may not do much, but it may help protect our military on the home front.

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Pre-Registration Comments[-]Go to Top

Randy wrote on Sep 19, 2007 4:03 AM:I do not support usury... Usury is regulated by the Federal government. Local government regulation is pre-empted. What about the usurious rates on credit cards once you are late on a single payment?-

Jim wrote on Sep 19, 2007 10:09 AM:I agree. If anything, military personnel should be getting special low-interest loans. Preying on young servicepeople in this fashion is unconscionable.

Chris wrote on Sep 19, 2007 10:40 AM:I just love how we hear about how these Marines are something special. They are these great warriors and the rest of us should bow down and worship them for defendig us from all of those wolfs out to destroy us. And yet these great warriors can't manage their own finances. We have to take them by the hand and protect them from these loan sharks. These loan sharks didn't put a gun the the heads of these Marines and force them to sign for a loan. How come People like myself have managed to go through life without falling prey to these sharks and I didn't have anyone holding me by the hand and guiding me through life.

Missing the Point wrote on Sep 19, 2007 10:53 AM:Why are young Marines forced to use these awful places? The fault lies in many directions: poor budgeting habits, partying too much but probably mainly the very low pay scale for these young people. More regulation is needed for 'check-cashing' places. They are nothing more than legalized extortion.

Another Chris wrote on Sep 19, 2007 7:23 PM:I applaud the Editor's opinion on trying to protect our service members from predatory lending. However, I think all people need to be protected from these bloodsuckers. There are many low income people out there who are scammed by these shysters as well. This should be a business that is legislated because it causes more harm than good. It is nothing more than legal loansharking. As for the military members themselves...I believe that they are paid well enough. It's just that they don't budget their money well enough. There is financial counseling available to them free of charge, but they do not take advantage of it. There are several factors leading to financial problems for our military folks. 1. Getting married too young. Many times the wife does not work outside of the home. 2. Having children too young. This is usually a reason for young wives not working outside of the home. 3. Buying cars, furniture or other luxury items that is far out of their financial reach. There are a number of businesses that prey on our military members knowing full well that if they can't pay, they get in trouble at work. One of the previous Commandants of the Marine Corps had it right when he issued the order that Marines could not marry during their first year of service. He was almost drawn and quartered for that order and was himself ordered to retract it. He had it absolutely correct because that has a huge impact on deployability. People just looked at it as infringing on civil rights. Now look where we are.

Kimball wrote on Sep 21, 2007 3:06 AM:Payday Loans are a big part of the problem? Consider this: Once I was overdrawn less than a dollar and was charged $34 for it. I wonder what kind of interest rate that works out to? Another time I had made some small debit card purchases of around $5 each and one for about $100. The bank ran the $100 through first and then charged me $34 each for 3- $5 purchases. I was only overdrawn $15 but had to pay $102 in fees! What would the interest rate be on that? If you ask me, the banks are more predatory than any payday loan business! They just seem to have more lobbyists on Capitol Hill so everyone is convinced that it’s the Payday Loan industry that is predatory. WAKE UP AMERICA! I have used Payday Loans on occasion to avoid these ridiculous bank fees. It was way, WAY cheaper than paying these fees! Why are the banks with their outrageous banking fees and their credit card interest rates with super high fees for late payments or going over your limit held to the same scrutiny as the Payday Loan industry? The payday loans have saved me from the real blood suckers... The banks!

to Chris wrote on Sep 22, 2007 4:16 PM:We've heard it all before Chris. You are envious of the Marines. What's new?

K. Louis wrote on Oct 15, 2007 2:37 AM:I think some people mean well on this issue but we are going down a dangerous path when we try to legislate behavior. It's like free speach, I don't agree with everything people say but believe in their right to say it. I may not like the way a person handles their finances but that doesn't mean I should pass legislation to change their behavior. This is a free country for better or worse. Free people are free to make good and bad decisions. When we take that away from them, even if we think we are right, they are no longer free.-

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