The Department of Defense has voiced its support for a consumer watchdog unit to crack down on predatory practices by auto dealers.
In a Feb. 26 letter to the Treasury Department, Clifford Stanley, undersecretary of defense for personnel and readiness, said that troops need protection on the domestic financial front.
"The Department of Defense fully believes that personal financial readiness of our troops and families equates to mission readiness," Stanley wrote to Michael Barr, Treasury's assistant secretary for financial institutions. "Therefore, any legislation that would enable and empower our military to be financially ready would be welcomed."
The Obama administration's proposed consumer financial protection agency (CFPA) has drawn fierce opposition from the financial industry as Congress debates how best to reform Wall Street in the wake of the economic near-collapse of 2008. With Senate Banking Committee chairman Chris Dodd currently locked in negotiations with Republicans about the agency's independence, power, and structure, the push from the Pentagon could boost public support for a watchdog agency.
"The Department of Defense would welcome and encourage CFPA protections provided to service members and their families with regard to unscrupulous automobile sales and financing practices, provided such protections would not limit access to legitimate products," Stanley said in the letter, which was first reported by Politico.
Troops have fallen prey to discriminatory practices, "bait and switch" financing, the falsification of loan applications, and prohibitively expensive products, Stanley said. A recent Pentagon survey found that out of a sampling of 659 counselors who work with troops on personal finance matters, 72 percent said they had counseled troops on one or more of these issues in the last six months.
"We believe the intervention of the CFPA in overseeing auto financing and sales for service members will help protect them and will assist us in reducing the concerns they have over their financial well-being," Stanley said.
In recent weeks, Democrats have appeared to relent on forming a stand-alone agency. Dodd suggested to GOP lawmakers that the watchdog function could be housed within the Treasury Department or the Federal Reserve, provided it still had sufficient independence.
The ultimate location of the agency remains unclear, but the White House has emphasized that what matters is not the watchdog's address, but its powers. Senate lawmakers are expected to announce a deal on financial regulatory reform measures in the next week or two. The House of Representatives last fall passed a measure to create a stand-alone agency.
Outside the Beltway, some of Hollywood's stars are also throwing their backing behind the proposed watchdog unit.
Earlier today, reality TV star Heidi Montag spoofed her recent plastic surgeries in an ad supporting the proposed consumer protection agency. In the ad, Montag described how aggressive practices by credit card companies can leave Americans drowning in debt.