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From a linked press release RE: violations of the Military Lending Act: > The MLA puts in place protections in connection with extensions of consumer credit fo

From a linked press release RE: violations of the Military Lending Act: > The MLA puts in place protections in connection with extensions of consumer credit for active-duty servicemembers and their dependents, who are defined as “covered borrowers.” These protections include a maximum allowable annual percentage rate of 36%, known as a Military Annual Percentage Rate (MAPR), a prohibition against required arbitration, and certain mandatory loan disclosures. These seem like good[1], common-sense, consumer protections. Why aren't these extended to credit consumers in general and not just military personnel? [1] I think one quibble might be the 36% max APR. This might be too low for some high risk customers to be able to get credit at all. But I'm not sure if there's any research around what a reasonable number might be instead.

wiredfool 5y ago
The reason that this is different than what you might expect from a free market approach is that part of the “being in the military” is a host of new rules that have the force of law, and one of these is to not default on loans. If you do, and your CO gets a call, then you’re in for a bad time.
- cheschire 5y ago
  Well the existence of rules in itself does not justify more rules. That's just bureaucracy. But I think what you're driving at is there are rules in place for military folks designed to keep them from becoming targets of manipulation, keep them from making poor household decisions that would distract them from regulatory tasks, etc. I don't imagine there are many protections for active duty folks that are designed purely to protect the individual. I suspect the primary motivation to get most of these types of laws passed is to protect the government.
  - wiredfool 5y ago
    No, I didn’t go into the multiple levels of chesterton's fence. I pointed out how the risk is different than the assumed free for all that is the free market. I will not potentially get thrown in the brig for defaulting on a payment. A private could be.
  - mpyne 5y ago
    > I don't imagine there are many protections for active duty folks that are designed purely to protect the individual. On the contrary, for reasons political ('everyone loves the troops'), administrative (Congress in many ways writes the 'Employee Handbook' for military personnel), and logistical (the military is heavily made up of people straight out of high school), there are several protections in law designed to protect military on active duty. We can cancel leases with landlords with nothing more than valid assignment orders, at any time. We can vote in elections using the easiest process there is, including instant registration and the ability to fax the vote over. And, yes, there are restrictions on lending to those on active duty to try to keep us out of trouble. Even though active duty personnel do make convenient targets of political affection, it's not all done out of a sense to protect the individual. Active duty personnel have clearances, access to government facilities, and so on. Protecting them from getting into stupid situations is to the government's benefit. But that all said, we get a lot of protections that exceed what the government deems necessary for its benefit. Just look at the differential treatment provided to military and government civilians (who also have clearances, access, etc etc) if you want to see.
  - deleted 5y ago
    [deleted]
  - 8note 5y ago
    I'm guessing that it's to ensure their loyalty, and the loan can't be paid off by them doing something bad for the military?
toomuchtodo 5y ago
https://www.moaa.org/content/publications-and-media/news-articles/2019-news-articles/advocacy/ask-your-lawmaker-to-expand-military-lending-act-provisions-to-all-americans/ https://www.moaa.org/content/publications-and-media/news-art...
specialp 5y ago
It is because that is the violation they can hit them with from a federal level. Usury laws are the domain of states.
_jal 5y ago
> Why aren't these extended to credit consumers in general Take your pick: - Finance companies have effective lobbyists. - Americans demand All The Freedoms. (Except for those freedoms.)
- hellojesus 5y ago
  Of course we do! Even the military covered bit is nonsense. Americans do not take kindly to voluntary transaction meddling by the government because who is the government to say what two private parties agree on so long as it does not infringe on the rights of others?
  - eropple 5y ago
    Believe it or not, the social part of our society finds there to be something coercive about Hobson's choices. Something about people not existing purely to be grist for your ideological mill? Shocking, I know, but, well, it is what it is. That social part of our society has cottoned onto the idea that for the poor among us the game is rigged--and that it is not merely rigged but it is being played such that the information necessary to know about the choices to get out of it show up far too late to be of use, or not at all. And while that is speaking of a just government, and ours is frequently unjust--sometimes it gets something right.
    - hellojesus 5y ago
      If this service existed in an extortionary way, why isn't there competition that undercuts the 36% rate? Perhaps it's because such high rates are necessary to make the business profitable at all. While the government thinks they just saved people from an evil corporation, all they've done is completely prohibit such customers from acquiring loans. If there is opportunity for arbitrage, you or I or anyone could step in and create a seemingly profitable business while also providing a social benefit. The moral hazard introduced by the government is the issue.
      - ggrrhh_ta 5y ago
vmception 5y ago
Federal government has limited purview of its citizens, but can more easily regulate the people in the military and interactions with them. As it derives its power from the delegates of the states, it has to appease them even if it has the power to regulate all facets of life. So there isn't a law for all people as not enough delegates can stomach that, but for the military its easy.
- jhgb 5y ago
  > but can more easily regulate the people in the military and interactions with them I always found it amusing how the "patriots" worshipping the military are pretty much the same people who hate any kind of government intervention in their lives.
  - ashtonkem 5y ago
    I’m reminded of the common quip that the US military is the largest socialist organization in the United States.
    - rjbwork 5y ago
      Not really socialist. It's just a giant imperial jobs program that also provides cover for channeling tax dollars into the coffers of the donor class.
    - MandieD 5y ago
      A socialist meritocracy.
    - _ktx2 5y ago
      This is actually one of the things I like to highlight to folks that talk a little-too-gleefully about socialism. The military implements socialism for convenience and cost effectiveness. The result is atrocious. This was in Camp Lejeune, NC. I almost never got adequate medical care. The medical system was strange and winding. There were all kinds of approvals needed for very simple things. The food standards were absolutely terrible. I don't know if it was an actual thing, but I was told there was a threshold for the number of roaches that could be present on food dispensing equipment before they'd throw the food out. The housing was disgusting. I lived in a barracks built in 1945 with inadequate parking, sewage that once popped a goldfish into a toilet bowl, water that occasionally would turn totally brown or yellow and is now known to have made people sick. There was a door to the interior of the building where ducts, pipes, and internet were run that all contained asbestos and asbestos warnings. The worst part, you had no option to say, "Give me the dollar amount you spend on this so I can find my own options" but they'll gladly tell you what they spent at an inflated rate. These are just the ones off the top of my head.
jzwinck 5y ago
If a loan is so risky that it requires greater than 36% interest, it should not be made. Loans with gigantic interest ruin lives.
- cesarb 5y ago
  > If a loan is so risky that it requires greater than 36% interest, it should not be made. Playing devil's advocate: it depends. When I was younger, there were times when, if you lent money at only 36% per month interest, you'd be losing money. You'd have to lend at rates higher than that, just to break even, no matter how low the risk was.
  - rory 5y ago
    You mean because your country had high inflation?
- pc86 5y ago
  Buying my friend a beer because he lent me $20 three days ago works out to an astronomical APR. It doesn't mean doing so should be illegal. There's a time and place for everything and that probably includes high interest loans as well.
  - tylerfontaine 5y ago
    I don't think anyone is suggesting that gratitude for good friendship should be regulated.
  - the_optimist 5y ago
    The social negatives of difficult-to-discharge debt and Ponzi-rate lending (wherein debt service cannot be met by an underlying economic growth behavior) are horrific and easily preventable. Letting even one person fall into the pit is a social travesty.
  - onion2k 5y ago
    I wouldn't be surprised if paying interest on loans in the form of alcoholic beverages is actually illegal if you don't have a liquor license.
mschuster91 5y ago
> This might be too low for some high risk customers to be able to get credit at all. We're living in near-zero interest rate land. 36% is usury, even 20% is that. Maybe the US should not only put a hard cap for any kind of loan at FED interest rate + 10%, but also force through an actual livable minimum wage so even the poorest classes don't have to choose between ridiculously expensive credit card debt or starving/dying because they can't afford healthcare.
jlawer 5y ago
More then 36% APR for anything more then a fraction of your weekly / monthly salary is likely to be crippling for most people and predatory. I can understand higher rates for very short term debts (i.e. a payday loan where the entire thing should be paid off in 1 month, but these lenders often try and have people turn over the principle into new loans). IF someone's credit won't support a 20% interest rate then I don't think they should be leant money in the traditional sense. Either the purchase isn't required (in which case it shouldn't happen), or if its essential they should be supported by mechanisms to get people out of debt. Governments can make low value loans available to help here. In Australia, your entitled to a loan if your on benefits (centrelink) in which repayments are deducted from your welfare payments but charged no interest.
- emodendroket 5y ago
  If the services are truly essential and basic and the government is stepping in, I think it's worth asking if we need to be bothering with repayment at all.
- KingMachiavelli 5y ago
  Depends on how many future benefits/welfare payments you can get be loaned/played early. Seems like eventually people would max out that option and then need some other source of loans.
0xB31B1B 5y ago
The issue with low APRs on high risk short term debt for consumers that need it is that it generally makes it expensive to issue the debt almost regardless of the risk of the person. Hypothetically if you need a $700 payday advance today, paid back in 2 weeks when you are paid, a credit card level (25% apr) would be an extremely small amount of money paid to the servicer (like 7 dollars total).

wiredfool 5y ago

The reason that this is different than what you might expect from a free market approach is that part of the “being in the military” is a host of new rules that have the force of law, and one of these is to not default on loans. If you do, and your CO gets a call, then you’re in for a bad time.

cheschire 5y ago
Well the existence of rules in itself does not justify more rules. That's just bureaucracy. But I think what you're driving at is there are rules in place for military folks designed to keep them from becoming targets of manipulation, keep them from making poor household decisions that would distract them from regulatory tasks, etc. I don't imagine there are many protections for active duty folks that are designed purely to protect the individual. I suspect the primary motivation to get most of these types of laws passed is to protect the government.
- wiredfool 5y ago
  No, I didn’t go into the multiple levels of chesterton's fence. I pointed out how the risk is different than the assumed free for all that is the free market. I will not potentially get thrown in the brig for defaulting on a payment. A private could be.
- mpyne 5y ago
  > I don't imagine there are many protections for active duty folks that are designed purely to protect the individual. On the contrary, for reasons political ('everyone loves the troops'), administrative (Congress in many ways writes the 'Employee Handbook' for military personnel), and logistical (the military is heavily made up of people straight out of high school), there are several protections in law designed to protect military on active duty. We can cancel leases with landlords with nothing more than valid assignment orders, at any time. We can vote in elections using the easiest process there is, including instant registration and the ability to fax the vote over. And, yes, there are restrictions on lending to those on active duty to try to keep us out of trouble. Even though active duty personnel do make convenient targets of political affection, it's not all done out of a sense to protect the individual. Active duty personnel have clearances, access to government facilities, and so on. Protecting them from getting into stupid situations is to the government's benefit. But that all said, we get a lot of protections that exceed what the government deems necessary for its benefit. Just look at the differential treatment provided to military and government civilians (who also have clearances, access, etc etc) if you want to see.
- deleted 5y ago
  [deleted]
- 8note 5y ago
  I'm guessing that it's to ensure their loyalty, and the loan can't be paid off by them doing something bad for the military?

toomuchtodo 5y ago

https://www.moaa.org/content/publications-and-media/news-articles/2019-news-articles/advocacy/ask-your-lawmaker-to-expand-military-lending-act-provisions-to-all-americans/ https://www.moaa.org/content/publications-and-media/news-art...

specialp 5y ago

It is because that is the violation they can hit them with from a federal level. Usury laws are the domain of states.

_jal 5y ago

> Why aren't these extended to credit consumers in general Take your pick: - Finance companies have effective lobbyists. - Americans demand All The Freedoms. (Except for those freedoms.)

hellojesus 5y ago
Of course we do! Even the military covered bit is nonsense. Americans do not take kindly to voluntary transaction meddling by the government because who is the government to say what two private parties agree on so long as it does not infringe on the rights of others?
- eropple 5y ago
  Believe it or not, the social part of our society finds there to be something coercive about Hobson's choices. Something about people not existing purely to be grist for your ideological mill? Shocking, I know, but, well, it is what it is. That social part of our society has cottoned onto the idea that for the poor among us the game is rigged--and that it is not merely rigged but it is being played such that the information necessary to know about the choices to get out of it show up far too late to be of use, or not at all. And while that is speaking of a just government, and ours is frequently unjust--sometimes it gets something right.
  - hellojesus 5y ago
    If this service existed in an extortionary way, why isn't there competition that undercuts the 36% rate? Perhaps it's because such high rates are necessary to make the business profitable at all. While the government thinks they just saved people from an evil corporation, all they've done is completely prohibit such customers from acquiring loans. If there is opportunity for arbitrage, you or I or anyone could step in and create a seemingly profitable business while also providing a social benefit. The moral hazard introduced by the government is the issue.
    - ggrrhh_ta 5y ago

vmception 5y ago

Federal government has limited purview of its citizens, but can more easily regulate the people in the military and interactions with them. As it derives its power from the delegates of the states, it has to appease them even if it has the power to regulate all facets of life. So there isn't a law for all people as not enough delegates can stomach that, but for the military its easy.

jhgb 5y ago
> but can more easily regulate the people in the military and interactions with them I always found it amusing how the "patriots" worshipping the military are pretty much the same people who hate any kind of government intervention in their lives.
- ashtonkem 5y ago
  I’m reminded of the common quip that the US military is the largest socialist organization in the United States.
  - rjbwork 5y ago
    Not really socialist. It's just a giant imperial jobs program that also provides cover for channeling tax dollars into the coffers of the donor class.
  - MandieD 5y ago
    A socialist meritocracy.
  - _ktx2 5y ago
    This is actually one of the things I like to highlight to folks that talk a little-too-gleefully about socialism. The military implements socialism for convenience and cost effectiveness. The result is atrocious. This was in Camp Lejeune, NC. I almost never got adequate medical care. The medical system was strange and winding. There were all kinds of approvals needed for very simple things. The food standards were absolutely terrible. I don't know if it was an actual thing, but I was told there was a threshold for the number of roaches that could be present on food dispensing equipment before they'd throw the food out. The housing was disgusting. I lived in a barracks built in 1945 with inadequate parking, sewage that once popped a goldfish into a toilet bowl, water that occasionally would turn totally brown or yellow and is now known to have made people sick. There was a door to the interior of the building where ducts, pipes, and internet were run that all contained asbestos and asbestos warnings. The worst part, you had no option to say, "Give me the dollar amount you spend on this so I can find my own options" but they'll gladly tell you what they spent at an inflated rate. These are just the ones off the top of my head.

jzwinck 5y ago

If a loan is so risky that it requires greater than 36% interest, it should not be made. Loans with gigantic interest ruin lives.

cesarb 5y ago
> If a loan is so risky that it requires greater than 36% interest, it should not be made. Playing devil's advocate: it depends. When I was younger, there were times when, if you lent money at only 36% per month interest, you'd be losing money. You'd have to lend at rates higher than that, just to break even, no matter how low the risk was.
- rory 5y ago
  You mean because your country had high inflation?
pc86 5y ago
Buying my friend a beer because he lent me $20 three days ago works out to an astronomical APR. It doesn't mean doing so should be illegal. There's a time and place for everything and that probably includes high interest loans as well.
- tylerfontaine 5y ago
  I don't think anyone is suggesting that gratitude for good friendship should be regulated.
- the_optimist 5y ago
  The social negatives of difficult-to-discharge debt and Ponzi-rate lending (wherein debt service cannot be met by an underlying economic growth behavior) are horrific and easily preventable. Letting even one person fall into the pit is a social travesty.
- onion2k 5y ago
  I wouldn't be surprised if paying interest on loans in the form of alcoholic beverages is actually illegal if you don't have a liquor license.

mschuster91 5y ago

> This might be too low for some high risk customers to be able to get credit at all. We're living in near-zero interest rate land. 36% is usury, even 20% is that. Maybe the US should not only put a hard cap for any kind of loan at FED interest rate + 10%, but also force through an actual livable minimum wage so even the poorest classes don't have to choose between ridiculously expensive credit card debt or starving/dying because they can't afford healthcare.

jlawer 5y ago

More then 36% APR for anything more then a fraction of your weekly / monthly salary is likely to be crippling for most people and predatory. I can understand higher rates for very short term debts (i.e. a payday loan where the entire thing should be paid off in 1 month, but these lenders often try and have people turn over the principle into new loans). IF someone's credit won't support a 20% interest rate then I don't think they should be leant money in the traditional sense. Either the purchase isn't required (in which case it shouldn't happen), or if its essential they should be supported by mechanisms to get people out of debt. Governments can make low value loans available to help here. In Australia, your entitled to a loan if your on benefits (centrelink) in which repayments are deducted from your welfare payments but charged no interest.

emodendroket 5y ago
If the services are truly essential and basic and the government is stepping in, I think it's worth asking if we need to be bothering with repayment at all.
KingMachiavelli 5y ago
Depends on how many future benefits/welfare payments you can get be loaned/played early. Seems like eventually people would max out that option and then need some other source of loans.

0xB31B1B 5y ago

The issue with low APRs on high risk short term debt for consumers that need it is that it generally makes it expensive to issue the debt almost regardless of the risk of the person. Hypothetically if you need a $700 payday advance today, paid back in 2 weeks when you are paid, a credit card level (25% apr) would be an extremely small amount of money paid to the servicer (like 7 dollars total).