Agency Action Halting Compliance Supervision Follows Lobbying From Industry, Puts Military Families at Risk of Exploitation


Washington, DC—  Today, Democracy Forward filed suit against the Consumer Financial Protection Bureau (CFPB) and the Department of Defense (DOD) for withholding records related to CFPB’s refusal to ensure that financial institutions are protecting servicemembers from predatory lenders by complying with their obligations under the Military Lending Act (MLA).


Today’s lawsuit follows CFPB’s decision to stop MLA supervision based on its erroneous assertion that it lacks the legal authority to proactively ensure that lenders comply with the MLA and Director Kathy Kraninger’s January 17, 2019 transmittal of legislative language seeking “clarifying authority” from Congress. Kraninger’s position conflicts with the law, which already provides the CFPB with legal authority to ensure that financial institutions are complying with their obligations under the MLA. Indeed, Members of Congress, including the authors of the MLA, and state attorneys general have made clear that CFPB is authorized to conduct MLA supervision. These statements include:


  • Director Kraninger doesn’t need new authority, she just needs to do her job and use all of the CFPB’s existing authorities to ensure our servicemembers and their families continue to receive all of their MLA protections.” – Press Release, Senator Jack Reed, January, 2019.
  • “As has been detailed by legal experts, and underscored by Republican and Democratic Members of Congress, there is no question the Consumer Bureau has the authority and the responsibility to supervise its regulated entities for compliance with the MLA.” – Letter from 23 members of the House of Representatives to Director Kraninger in December, 2018.
  • “…the CFPB currently has the supervisory, examination and enforcement authority it needs to oversee institutions under its jurisdiction and ensure they are in full compliance with the MLA.” – Bipartisan letter from Members of the House in October, 2018.
  • “…the CFPB already possesses the authority to enforce the MLA and examine many types of lenders for the purposes of ‘detecting and assessing risks to consumers and to markets for consumer financial products and services.’” Letter from 49 Senators to then Acting Director Mulvaney in August, 2018.
  • “We believe that the CFPB would be failing to abide by its statutorily mandated duty to enforce the MLA by restrictively interpreting its examination authority to preclude reviewing lenders’ compliance with the MLA… Congress explicitly has provided that one “applicable authority” available to the CFPB is examination of lenders in order to “detect[] and assess[] risks to consumers and to markets for consumer financial products and services.” – Letter from 33 state attorneys general to then Acting Director Mulvaney in October, 2018.


“The Trump administration is abdicating its legal and moral duty to protect military families from exploitation by predatory lenders,” said Democracy Forward Executive Director Anne Harkavy. “That’s why we’re investigating how and why the administration is refusing to use the authority Congress gave it to police predatory lenders who profit off exploiting America’s servicemembers and their families.”


CFPB is authorized to conduct supervisory examinations for the purpose (among others) of “detecting and assessing risks to consumers and to markets for consumer financial products and services.” The MLA reflects Congress’s conclusion that exorbitant interest rates and predatory lending practices present a serious risk to servicemembers.  So, there is no question that CFPB is authorized to conduct examinations to ensure that the financial institutions under its jurisdiction are complying with MLA requirements, and CFPB’s apparent conclusion to the contrary is plainly inconsistent with the law and with the intent of Congress.


CFPB’s decision is also at odds with the position of the Department of Defense. In October 2018, DOD Acting Assistant Secretary for Manpower and Reserve Affairs Stephanie Barna wrote in a letter to Members of Congress that predatory lending practices “continue to pose risks to the financial readiness of Service members and families,” and that “[a]bsent continued monitoring and enforcement of MLA compliance, the Department and the prudential regulators may be unable to identify or respond timely to trends or early warning signs of harmful practices.” Yet, despite this strong view, reports indicate that DOD was never consulted regarding CFPB’s intent to suspend MLA supervision. By suspending examinations, the CFPB has put servicemembers at serious risk of being victimized by these predatory practices.


CFPB’s decision to stop exercising its MLA supervisory authority favors industry groups, including the auto dealership industry, which have lobbied to reduce protections for military families when taking out car loans, and the Consumer Bankers Association, which requested changes to the MLA to benefit its membership, at the expense of servicemembers and their families.


Democracy Forward submitted the FOIA requests to the CFPB and DOD on September 4, October 29, and December 12, 2018. The lawsuit was filed after the agencies failed to comply with their statutory obligations to release the requested records.




Democracy Forward is a nonprofit legal organization that scrutinizes Executive Branch activity across policy areas, represents clients in litigation to challenge unlawful actions, and educates the public when the White House or federal agencies break the law.


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