Cyrus Dugger

Congress Has Acknowledged That Mandatory Arbitration Agreements Are Unpatriotic

Well, not yet. But it’s a catchy title, and it’s arguably true by implication. In response to the increasing frequency of debt problems of returning and active duty servicemen, last month Congress passed legislation that capped interest rates on loans to soldiers at 36%. Interestingly, the legislation also included a prohibition on the use of mandatory arbitration agreements in loans to US servicemen.

So Congress has said:

Credit rates over 36% = Bad for Servicemen

Arbitration clauses in lender contracts = Bad for Servicemen

The reason to create special rules for servicemen is that they and their families are put under exceptional stress during periods of active duty, and are in the most vulnerable possible moments in their lives. Similarly, they are made highly vulnerable to predatory/payday lending. The passage of this bill is undeniably a good thing.

Then again, that leaves the rest of us with:

Credit rates over 36% = Not bad for Non- Servicemen

Arbitration clauses in lender contracts = Not bad for Non-Servicemen

Wait, how can that be? Although there is a big difference between those with family members overseas and the rest of us, it can’t be an inherent difference in our receptivity to predatory lending and arbitration clauses. If the reason to free troops from interest rates above 36% and arbitration clauses is that they are exceptionally vulnerable, this reasoning implies that we should also grant the same privileges to those who are equally as vulnerable right here in the US, regardless of whether they are actively in uniform.

Can anybody explain to me why I’m wrong?

Posted at 4:38 PM, Dec 05, 2006 in Permalink | Comments (0) | TrackBack (0)