Fighting for troops’ finances

Payday loans, some believe, began way back among the Roman soldiers in the time of Caesar.

And military personnel today still remain a target for predatory loans and financial fraud, Holly Petraeus told a group of about 50 uniformed personnel at Fort Harrison Wednesday. Plus, some in the military, especially young people, manage their financial affairs poorly and dig themselves into debt with nothing more than a credit card.

Petraeus is in charge of the office of Servicemember Affairs at the U.S. Consumer Financial Protection Bureau, established by federal legislation passed in July 2010 with a mission that includes enforcement of 18 financial laws, and extending enforcement beyond banks to other financial institutions. She is married to Gen. David Petraeus, the current director of the CIA and former commander of international forces in Iraq and Afghanistan.

She came to Fort Harrison at the invitation of U.S. Sen. Jon Tester and was joined by Montana National Guard Adj. Gen. John E. Walsh, Montana Attorney General Steve Bullock and several local military leaders in a discussion on protecting soldiers from financial fraud and hardship.

Those problems range from unscrupulous lenders and debt collectors to simple poor planning — and of the combination of enforcement and education that aims to help.

Some financial problems start before troops are issued a uniform. Petraeus said one Air Force survey found that recruits entering basic training already held an average of $10,000 in debt.

The pitfalls are exacerbated by a lack of knowledge among both soldiers and the people they do business with. Frequently, troops and their families don’t know their rights, and it’s hard to find all the relevant information in one place.

Problems include landlords trying to illegally evict families of deployed soldiers and large banks illegally foreclosing on homes and failing to give credit-card interest relief as required in some cases under the Servicemember Civil Relief Act.

“I think what we need to do is do a better job of educating those (financial) providers of what their role under the SCRA is, so that they’re aware, as well as making the soldiers and sailors and airmen aware of what their responsibilities are under that,” said Bill Harant, family readiness support assistant with the Montana Army Reserve.

Petraeus said she had contacted the 25 largest banks in the country about their obligations to military personnel.

“One problem is, it’s only as good as the individual on the other end of that phone, so it’s a constant struggle to get people to educate their servicers so they give the right answer to that servicemember who calls … and at the state level as well, to educate your landlords about the fact that this family has protections, especially while they are on active duty.”

Bullock noted that the landlord is likely just one piece of that; the service member facing eviction is also probably facing other financial pressures.

“Debt collectors, even though they are supposed to be asking, ‘Are you or any members of your family in active duty?’ They don’t always do that,” he said.

Debt collectors have threatened to report personnel to their commanding officers and cited the Uniform Code of Military Conduct, as if they were the ones who enforce it, Petraeus said.

Sometimes the service members need to speak up. To activate the SCRA requirement that credit card interest be held, in some cases, to a maximum of 6 percent for active-duty troops, the cardholders need to tell the bank of their status. In other situations, like some foreclosures, it’s up to the bank to make sure the noteholder isn’t deployed.

High-interest loans were curtailed in Montana by Initiative 164 last year, and the Military Lending Act limits the annual interest rate of some loans to 36 percent. Still, bad and sometimes illegal loans abound.

“The person who makes it easiest for you to borrow is not necessarily the person you want to borrow from,” Petraeus said. “With the Internet, you don’t even know where they are.”

She mentioned one case where a service member was charged fees even after paying off a loan obtained online. After much investigation, authorities found that the loan originated in the eastern European nation of Croatia.

Bullock said that his office is currently investigating high-interest loans to Montanans from other jurisdictions.

The military offers several programs and resources, including financial literacy classes. But some people Wednesday said such knowledge is retained poorly, and one person said they had to make sure the classes weren’t seen along the lines of a trip to the dentist. And the military cannot order the spouses of troops —typically the ones managing family financial affairs during a deployment — to take such classes.

Tester said that in the current cost-cutting mood of Washington, it’s important to speak up about which programs work and which do not.

Many financial problems arise simply because, like many other people, some military personnel have tastes that exceed their budget. And the extra pay they receive for deployment gives the illusion of an endless stream of income that will eventually end.

Petraeus described a tale from Fort Hood, Texas, where an infantry division returned from a deployment, parading new cars onto the base. Three months later, the story goes, a parade of tow trucks hauled many of the repossessed cars out.

Petraeus worked for about a decade in military affairs with the Better Business Bureau before taking her current post about a year ago. She’s a mother, granddaughter and great-granddaughter of military personnel. She also held meetings in Great Falls. It’s her first trip to Montana, despite living in 24 different places in her husband’s 37-year Army career, she said.