The ranking minority member of the Senate Committee on Banking, Housing, and Urban Affairs, Sen. Sherrod Brown, D-OH, has criticized the Consumer Financial Protection Bureau’s failure to monitor financial services institutions for violations of the Military Lending Act.

The MLA was passed in 2006 with broad bipartisan support and prevents predatory lenders from taking advantage of active-duty service members through a number of protections including interest rate cap on loans to service members and their families.

[caption id="attachment_9328" align="alignright" width="237"] Sen. Sherrod Brown[/caption]

“The CFPB is neglecting its duty to protect the women and men who serve and protect our country. The CFPB has broad authorities. Congress does not need to take action, the CFPB Director does,” said Brown.

The senator’s criticism of the CFPB, however, occurred on January 18. That was one day after Kathleen Kraninger, director of the CFPB, had asked Congress to grant the CFPB clear authority to supervise financial institutions for compliance with the Military Lending Act.

“The bureau is committed to the financial well-being of America’s service members. This commitment includes ensuring that lenders subject to our jurisdiction comply with the Military Lending Act so our service members and their families are provided with the protections of that law,” said Kraninger. “That’s why I have asked Congress to explicitly grant the bureau authority to conduct examinations specifically intended to review compliance with the MLA. That authority would complement the work the bureau currently does to enforce the MLA."

Kraninger thought legislation proposed in the House of Representatives, H.R. 442, that grants the bureau such authority was a good first step, though she would like to see bipartisan legislation advances as quickly as possible in the 116th Congress.

The CFPB transmitted a legislative proposal to the speaker of the House of Representatives and the vice president in his capacity as president of the Senate, and shared copies with the chairs and ranking members of the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services. 

During former Director Richard Cordray’s tenure, the CFPB used its supervisory authority to proactively examine banks and non-bank lenders for violations of protections under the MLA, according to a statement from Brown.

Under Mick Mulvaney, the CFPB ended those examinations without the cooperation of the Department of Defense and said it would reconsider whether the CFPB has the authority to examine lenders for compliance with the MLA. Kraninger affirmed that plan, meaning the CFPB will only enforce for violations of the MLA if some other action brings the matter to the Bureau’s attention, according to the statement.