THE BURNED OVER DISTRICT

After passage of a law seven years ago protecting the military from predatory lenders, the administration is now taking steps to protect the military from predatory lending products designed to take advantage of loopholes left in the law.

The Obama administration is proposing sweeping changes to a seven-year-old federal law that was intended to shield service members and their families from high-cost loans tied to their paychecks, a move that reflects the Defense Department’s growing recognition that lenders have exploited loopholes in the law.

Those loopholes in the Military Lending Act have left hundreds of thousands of service members across the country vulnerable to potentially predatory loans, including high-cost credit from retailers to buy electronics, payday-style loans and loans tied to car titles.

The proposed updates to the law would extend a 36 percent interest rate cap on short-term loans to cover a much broader swath of products — from installment loans to credit cards — that have proliferated since the law was passed by Congress...

The changes, which are being proposed by the Defense Department, would strengthen protections for military members by vastly expanding the kinds of credit covered by the law’s interest rate cap. The proposal also requires that creditors enhance their disclosures to military members, mandating that the lenders tell military members that they should first try to find alternatives to the costly forms of credit.

Creditors could also no longer require service members to agree to arbitration, a concession that would strip borrowers of their rights to fight in court.

The final rules, expected to go into effect by next year, represent an acknowledgment that lenders, intent on offering loans regardless of the federal restrictions, devised loan products that fell squarely outside the loan’s restrictions.

The predators will probably find new loopholes to continue leeching on a particularly attractive segment of America's low income population. It's how they get rich.