Consumer Financial Protection Bureau

Missing in Action? Consumer Financial Protection Bureau Supervision and the Military Lending Act

The Consumer Financial Protection Bureau (CFPB), under the leadership of Acting Director Mick Mulvaney, recently announced plans to end supervisory examinations for violations of the Military Lending Act, a statute designed to protect military servicemembers and their families from predatory lending. Congress passed the Military Lending Act (MLA) in 2006, in response to evidence that predatory loans targeted at servicemembers were undermining not only the morale and financial stability of our troops, but also the nation’s military readiness in general. The MLA caps the interest on all loans made to servicemembers and their families at 36 percent per year and prohibits the extension of payday loans, vehicle title loans, and other types of harmful credit products to military personnel. Since 2012, the CFPB has conducted supervisory examinations of large banks, payday lenders, and other financial companies to ensure compliance with the MLA.

This report is the first publicly available legal analysis of the CFPB’s authority to include MLA compliance within its supervisory exams. This analysis concludes that the CFPB has ample legal authority under both its enabling statute, the Consumer Financial Protection Act (CFPA), as well as the MLA itself to include the MLA within supervisory exams.

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