Heat on Heck following payday loan fight

WASHINGTON — Sensing the chance to land a punch, Democrats last week launched a multipronged attack on Rep. Joe Heck and his involvement in a Capitol Hill fight over credit loans to members of the military.

The Democratic Congressional Campaign Committee paid for digital ads and sent mailers into Heck’s Henderson-based district, saying the appeal was aimed particularly at military families.

The charge: The Nevada Republican sided with predatory lenders over soldiers in a provision he pushed as chairman of the House military personnel subcommittee and tried to preserve when the House Armed Services Committee voted April 28 on its annual defense authorization bill.

Heck said in an interview the issue and his position have been “grossly misrepresented” by Democrats and consumer groups. His spokesman Greg Lemon added that Heck “is opposed to predatory lending practices directed at service members.”

During an all-night session, the Armed Services Committee voted 32-30 to strip out the controversial provision, with six Republicans voting with Democrats to do so.

So the issue itself is moot for now but Democrats believe it might resonate politically in a district where Heck has not been strongly challenged during the past two elections.

The Democratic Congressional Campaign Committee material was distributed in a week Heck was home in Southern Nevada.

“We have been using this recess to hold him accountable for his shamefully wrong priorities,” said Matt Thornton, the group’s communications director.

At issue is a regulation being written at the Pentagon seeking to close loopholes in the Military Lending Act, which aims to protect service members from unscrupulous lenders. The 2006 law set a 36 percent cap on the rate and fees for certain forms of credit to members of the armed forces.

The lending act covers payday loans, vehicle title loans and tax refund anticipation loans. But there have been widespread reports that unscrupulous lenders are tweaking their credit offers to get around the law, trapping thousands of service members in short-term, high-interest loans.

“The fact that payday lenders aggressively and shamelessly market to military families is well-documented,” said Rep. Tammy Duckworth, D-Ill. “The Defense Department identified predatory lending as the single biggest financial challenge facing service members and their families.”

The proposed Defense Department update, which has not yet been published, would aim to expand the lending law to cover most forms of credit like credit cards but not mortgages or auto loans.

Heck’s subcommittee last month approved a provision that would have held off the new regulations until after the Pentagon reported to Congress on what comments it received on the proposal and “the impact to military readiness, if any” from service members running afoul with credit.

It also called for the department to determine the impact on the Defense Manpower Data Center, which maintains databases of military members that would be called upon to play a larger role in the new regulations.

“For anyone who has tried to access that database it seldom functions on a good day,” Heck said.

Heck said a 2014 52-page study cited as the basis for the new regulations had problems, and he wanted Congress to see more justification.

While chasing bad actors, Heck said a clampdown could have unintended consequences of restricting legitimate forms of credit. The same point was made last week in a speech by Debbie Matz, chairman of the National Credit Union Administration, the federal agency that regulates credit unions.

“I read the study,” Heck said. “The study has a lot of flaws. It is not statistically valid, the assumptions are not supported by the data and they don’t report a lot of data.”

“All we wanted to do is say, ‘DOD you’ve got a whole lot of data from the study which isn’t in the report. We’d like to see the data.’ ”

“Everybody talks about how it impacts readiness, but they’ve never objectively quantified the impact on readiness,” Heck said. “So tell us how many soldiers, sailors, airmen, Marines, have lost a clearance, have had to change an occupational specialty, have had to be discharged” from credit problems.

Heck said he was not lobbied by financial service interests. He maintained the provision came out of meetings he and his subcommittee staff held with Pentagon officials writing the new regulations.

During committee debate, Democrats said the Heck-backed legislation could delay added consumer protections for a year or more because it gave the Pentagon until next March to respond and then tacked on another 60 days before the regulation could be advanced.

“There have been exhaustive stories that indicate the abuses by payday lenders,” said Rep. Susan Davis, D-Calif. “It is clear no matter what community you are in, if you have a lot of military personnel, this is something that is pretty obvious.”

Heck responded the department presumably has the information, “and they could give us the data tomorrow.”