Pentagon, Celebrities Call for Consumer Protection Agency

March 9, 2010 — -- President Obama. Will Ferrell. Sen. Chris Dodd. Heidi Montag. Now you can add the Pentagon to a growing list of advocates for an independent consumer protection agency.

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.