Washington, D.C. – Yesterday, while military leaders testified about the important work of the Consumer Financial Protection Bureau (CFPB) to protect and educate military families and consumers, Senate Armed Services Committee members proposed cutting off funding and eliminating the agency altogether.
At yesterday’s hearing of the Personnel Subcommittee of the Senate Armed Services Committee, senior enlisted leaders spoke about CFPB and its dedicated military protection office. Under the direction of the office’s first director Holly Petraeus, the agency secured $120 million in refunds, handled 70,000 complaints, and provided financial education at 145 military facilities to servicemembers, veterans, and their families.
“I know that our sailors think about when they get the calls from debt collectors, they think about mortgages, and they think about interest rates,” said Master Chief Petty Officer of the Navy Steven S. Giordano to the Senate panel. “We continue a weekly battle rhythm with the office to continue to figure out any support that can be provided in the realm of financial literacy.”
“We’re never going to be experts within the Department of Defense on this type of money management – it’s not what the American people expect us to do,” said Chief Master Sergeant of the Air Force James A. Cody. “They are experts…their sole focus is on that.”
Sergeant Major of the Army Daniel A. Dailey described how CFPB’s work has led soldiers to seek alternatives to high-cost loans peddled by nearby lenders, such as Army Emergency Relief Fund, which offers no-cost and low-cost loans. “I see value in that organization and I know they have done great things for our servicemembers,” SMA Dailey said.
These comments were a stark contrast to two pieces of legislation proposed yesterday. A proposal from Senator Ted Cruz would shut down the new consumer agency and the military protection office. A separate proposal from Senator Mike Rounds would cut off the agency’s funding. It would also divert the agency’s Civil Penalty Fund which funds restitution for victims and financial coaching for veterans. Cruz and Rounds are both members of the Senate Armed Services Committee.
Active-duty servicemembers face unique financial challenges compared to their civilian counterparts. For example, servicemembers might regularly receive Permanent Change of Station (PCS) orders that require them to move to a new duty station, making it more difficult for military spouses to secure stable employment. This might also force military families to sell their homes even if they are “underwater.” The CFPB and its dedicated military office worked closely with Fannie Mae and Freddie Mac to ensure that military families with PCS orders qualify for a “short sale,” allowing them to avoid the financial havoc of a foreclosure.
The Department of Defense (DOD) has long been concerned about the financial fitness of the force, stating in a report that “predatory lending undermines military readiness, harms the morale of troops and their families, and adds to the cost of fielding an all-volunteer fighting force.”
“According to DOD, every time we separate a servicemember, it costs the Department $57,000,” said Senator Jack Reed during the hearing. “The Department estimates that each year, somewhere between 4,700 and 8,000 servicemembers are involuntarily separated due to financial hardship. That’s a staggering amount of money and it’s totally avoidable I think.”
“Losing a security clearance due to financial distress is a leading cause of involuntary military separations,” said Rohit Chopra, a Senior Fellow at the Consumer Federation of America and former CFPB official. “Military leaders agree that the consumer agency’s work on military financial readiness is playing a key role in overall force readiness.”
Chopra submitted testimony to the Senate panel on behalf of the Consumer Federation of America, the National Military Family Association, and other public interest groups to support the vigorous enforcement of laws combatting financial fraud that specifically target the military community. The statement detailed recent law enforcement actions to address misconduct by financial institutions that harmed military families.
“Proposals to shut down the consumer agency and its military office should have only one home: the dumpster,” said Chopra.
Contact: Rohit Chopra; firstname.lastname@example.org
The Consumer Federation of America is an association of more than 250 non-profit consumer groups that, since 1968, has sought to advance the consumer interest through research, education, and advocacy.