FOR IMMEDIATE RELEASE

RADM Hering and Michael Calhoun Appear on USA Federal's “Money and You” Radio Show

San Diego, Calif., August 30, 2006 – The danger of payday lending to our military was front-and-center during today’s USA Federal “Money and You” radio show.

RADM Len Hering took direct aim at the menace of payday lending. “Right outside our gates they market high-cost loans that trap our young men and women into a cycle of debt," said Rear Adm. Len Hering, Commander, Navy Region Southwest. "Caught in these traps, these individuals can no longer do their jobs."

“Families are affected. Careers are being destroyed. And our nation's security is at jeopardy," he said. “Predatory lending practices represent a real and growing threat to the military readiness of our Navy men and women stationed in California."

According to recent DoD research, military service members are four times more likely to be payday borrowers than civilians. "The connection between military readiness at this time when our nation is at war and the marketing of payday loans outside of our gates is well-established," Hering said.

RADM Hering was joined by DoD advisor and national lending expert Michael Calhoun, President of the Center for Responsible Lending. “On average, payday borrowers pay back over $800 for a loan of about $300. Payday loans are marketed as short-term cash advances, but the two-week loan is a lie; 99 percent of payday loans become revolving debt,” said Calhoun, “As strong evidence of payday lenders’ dependence on this loan flipping, over 90 percent of their profits are collected from borrowers caught in a long-term cycle of debt, with at least five and commonly eight, twelve, or even 15 loans per year.”

According to a recent report from the California Reinvestment Coalition, the highest concentration of payday lenders in the state is clumped around Camp Pendleton’s Marine base, north of San Diego. Around 70 lending offices are located near the base, looking to attract some of the over 60,000 military and civilian workforce.

Mary Cunningham, President/CEO of USA Federal Credit Union said, “Payday lending is a one-way street to nowhere for young military families. We work hard to educate them how to achieve real financial security. We also believe it is time for legislation to put an end to these incredibly high fees.”

Major Gen. Michael Lehnert, Commanding General of Marine Corps Installations West,
recently said, “"(Payday lenders) are clustered around every single base like flies on honey. Payday lenders take advantage because California has some of the weakest laws in the country. Here in San Diego we regularly see rates of 460 percent (over the course of a year), and I have seen rates as high as 920 percent being charged legally against our service members. Ultimately, because we expect our Marines to be financially responsible, their ability to re-enlist, compete for good jobs and keep a security clearance is affected.”

Legislation is pending in Sacramento to address this problem. Military leaders are on record supporting Assembly Bill 1965 in the State Legislature. It would:

• Cap the annual interest rate at 36 percent.
• Bar payday loan companies from using military insignias in advertising and from implying in ads that they are endorsed by the armed forces.
• Keep interest from accumulating when military personnel are deployed overseas, such as in Iraq or Afghanistan. The borrower would have 30 days to start repaying the loan after returning to a U.S. base.

About USA Federal

With more than 61,000 members and over $700 million in assets, USA Federal Credit Union (headquartered in San Diego) operates 20 branches, including locations in San Diego and Riverside Counties, Las Vegas (NV), Japan and Korea. Members of this non-profit financial cooperative include the military, civilians and select employee groups. Founded in 1953 at the Naval Training Center in San Diego, USA Federal offers a full range of financial services including business services and consumer savings, checking, mortgage and home equity loans, auto loans, debit and credit cards, share term certificates, IRAs, and a 24-hour phone center. Online services include eStatements, Online Banking and Bill Pay with Money HQ and online loan applications and approval. Additional services include the BALANCE financial fitness program, and investment and retirement planning offered by MEMBERS Financial Services. This credit union is federally insured by the National Credit Union Administration. Visit www.usafedcu.org or call (800) 220-1USA (1872) or (858) 831-8100 for more information.

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Note: USA Federal maintains the above information for archival purposes, which is presumed accurate upon release, however, data may become outdated over time and affect accuracy.