FRA NewsBytes – 6-28-13

fra_logo_tr-c6-opt1In this week’s edition:
SecDef to Detail 2014 Sequestration Cuts
Retirement and Compensation Commission Appointed
Military Predatory Lending Warnings and CFPB Orders Refunds
FRA NHQ Closed on Independence Day

SecDef to Detail 2014 Sequestration Cuts
Secretary of Defense (SecDef) Chuck Hagel announced that Defense Department plans for dealing with 2014 sequestration budget cuts will be submitted to the Senate Armed Services Committee (SASC), possibly as early as next week. Neither the House (H.R. 1960) nor Senate (S. 1197) Armed Services Committee-approved version of the FY 2014 National Defense Authorization Act (NDAA) accounts for $52 billion in cuts that will take effect on September 30, 2013, unless alternative spending plans are approved.

SASC Chairman Carl Levin (Mich.) and Ranking Member James Inhofe (Okla.) formally requested a spending cut outline from SecDef Hagel in May. In conjunction with his responses, Hagel stated, “It is my hope that Congress will work to enact a package of deficit reductions that the President can sign that de-triggers sequestration by the end of the year.”

Members are urged to use the FRA Action Center to ask their elected officials to exclude Defense from the next round of sequestration cuts.

http://www.capwiz.com/fra/issues/alert/?alertid=62389731

Retirement and Compensation Commission Appointed
Provisions of the FY 2013 National Defense Authorization Act (NDAA) called for the establishment of a nine-member Military Compensation and Retirement Modernization Commission to review all aspects of military pay, benefits and retirement compensation. President Obama appointed the Honorable Alphonso Maldon Jr. to serve as the panel’s chairman, and the House and Senate each appointed four commissioners:  former Senators Larry Pressler (S.D.) and Bob Kerrey (Nebr.); former Congressmen Chris Carney (Pa.) and Steve Buyer (Ind.); retired Navy Adm. Edmund Giambastiani, Jr.; retired Army General Peter Chiarelli; former Defense Department (DoD) comptroller Dov Zakheim and Mike Higgins, former Professional Staffer with the House Armed Services Committee.

DoD is required to provide the commission with its recommendations by November 1, 2013, with the stipulation that the commission will not reduce benefits for any current retiree.

FRA has consistently expressed serious concerns about cost-driven efforts to “reform” pay and benefits and contends that the current pay and benefit package is key to recruiting and retention and sustaining military readiness.  FRA is closely monitoring the activities and deliberations of the commission and will seek opportunities to provide input.

Military Predatory Lending Warnings and CFPB Orders Refunds
Attorney Generals from 13 states have written an open letter to Secretary of Defense (SecDef) Chuck Hagel, requesting more robust protections for service members exposed to predatory consumer lending practices. The letter states: “Our military service members are disproportionately targeted by predatory lenders. Military bases are surrounded by storefront predatory lenders, many of which charge triple-digit annual [interest] rates.”

FRA strongly supported provision in the FY 2007 National Defense Authorization Act known as the Military Lending Act (MLA). Although the law was broad, the DoD regulation implementing the Act was limited in the types of consumer credit covered. The letter from the State Attorney Generals states that “While the MLA has been largely successful in curbing abusive lending in categories covered by the Department’s current rules, the narrow categories and definitions create large loopholes that permit lenders to fashion abusive or predatory transaction that avoid MLA’s protections.” The letter further requests that SecDef broaden the current regulation’s definition of covered consumer credit to provide comprehensive protections against abusive lending practices and that it be done expeditiously.

In related news the Consumer Financial Protection Bureau (CFPB) ordered U.S. Bank and Dealers’ Financial Services (DFS) to end deceptive marketing and lending practices targeting active-duty military members.  The two companies must refund $6.5 million to service members for failing to properly disclose all the fees charged to troops who used the companies’ Military Installment Loans and Educational Services (MILES) auto loans program, and for misrepresenting the true cost and coverage of add-on products financed along with the auto loans. The companies are also faulted for the process associated with payments for cars bought through MILES via military allotment.

FRA NHQ Closed on Independence Day
FRA’s National Headquarters (NHQ) offices will be closed on Thursday, July 4, in observance of Independence Day. Congress is also in recess next week and the next issue of NewsBytes will be July 12, 2013. The NHQ staff wishes all FRA shipmates a safe and enjoyable 4th of July.