Hey, Uncle Sam: Want to Protect the Troops from Predatory Car Loans? Pay Them Better

I hate to overuse the term, "Now I've heard everything," but now that I've seen comments from the Department of Defense claiming that predatory car dealers are a threat to combat readiness, well, now I've heard everything.

When I first read about this in The New York Times last week, I even thought it might be a hoax. I thought it might turn out that there was no "Under-Secretary of Defense So-and-So" who was wasting valuable time on this. The alleged threat to readiness is that the troops will be too worried about their car payments to get ready for combat.

You like to think the Defense Department has bigger things on its mind, like two hot wars going on at the same time, in Iraq and Afghanistan.

But no, it's not a hoax, I find that the Defense Department has complained more than a couple of times in the last few months, while regulators debate proposals for a tougher consumer protection agency, in light of the recent credit crisis and financial meltdown.

Let me add right away I'm all in favor of using existing laws and existing agencies to punish unscrupulous auto lenders when they do anything illegal.

I was a junior officer in the U.S. Navy once upon a time, and the guys who worked for me for the most part were straight out of boot camp. There's nobody who's more vulnerable to a slick sales pitch than these kids who are away from home for the first time in their lives.

At the time, in the late 1970s and early 1980s, a used Pontiac Trans Am with a garish, flaming-eagle decal on the hood -- popularly called a "chicken" -- was the hot car among my guys. I remember the same car changed hands several times in my little group as one sailor re-sold it to another, and so on. Each transaction was a bigger financial disaster than the last, until the car finally got repossessed or we deployed to the Mediterranean for six months, I forget which came first.

The reason I know the sordid details about the "Chicken Trans Am" is what I consider a more genuinely scandalous, untold part of the story. The people who are advocating for the financial well-being of young enlisted men and women ought to do something about this: As their division officer, if a lender complained to our command about a sailor who didn't pay his bills, I was required to "counsel" him to pay his bills.

That's rich, isn't it? I was acting as an unpaid collection agent for some sleazy auto lender. I don't know if the military still does this, but they did it back then. I can see counseling the troops in general about handling their money wisely, but not to have a superior dun a specific individual on behalf of a specific lender. Can you imagine if a creditor could call your civilian employer and have your boss tell you to pay up?

Besides, in my experience there were more urgent "threats to combat readiness" than car dealers -- like sunburn. That temporarily disabled a few of my guys a couple times. I don't remember anybody who couldn't work because he was worried about his car payment.

You know what the Defense Department could do to protect their young kids from predatory lenders? Pay them better, so they could afford to go to a reputable car dealer. Maybe paying the troops what they're worth would also help the Defense Department recruit more. That way, they wouldn't have to deploy the same people as often. That would be a lot more helpful than picking on used-car dealers.

Graphic: Defense Department