Meet Holly Petraeus: U.S. Servicemembers' Advocate at the CFPB
For example, in response to the Great Depression, Congress in the 1930s created the Federal Deposit Insurance Corporation to regulate financial institutions and insure most of our bank deposits. Similarly, after the devastation of World War II, global powers established the United Nations to facilitate cooperation among, and maintain peace between, countries.
This week, America is witnessing the genesis of another agency born out of disaster and designed to protect us: the Consumer Financial Protection Bureau. Crafted by the Obama administration as part of the president's larger plan to reform Wall Street after the 2008 financial meltdown, the agency's purpose is to help consumers avoid being taken advantage of.
Specifically, the CFPB strives to create a marketplace for financial products -- including student loans, credit cards, mortgages, and prepaid cards -- "where customers can see prices and risks up front and where they can easily make product comparisons, in which no one can build a business model around unfair, deceptive or abusive practices, that works for American consumers, responsible providers, and the economy as a whole."
Guiding Military Members Through Their 'Extra Challenges'
In Petraeus' open letter on the CFPB's website, she writes: "we understand that military life can have some extra challenges, such as deployment and frequent moves, and that those challenges can sometimes have powerful financial repercussions. We also know that there are businesses and scammers that target servicemembers with bad deals and outright rip-offs," such as lenders who charge unusually high interest rates, or require advance payments in order to qualify for loans.
As Petraeus explains, soldiers, sailors and airmen face different issues depending on where they are in their lives and careers. "Certainly for a young servicemember, one of the first things they want to do is go out and buy that car, or buy that computer or that iPhone or that TV," she says. Here Petraeus is speaking from experience. As National Public Radio reported, Petraeus has confided to a room full of servicemembers that when she and her husband were younger, they "did some of the things that you know I don't recommend people do now – which is, buy the hot sports car, you know, sign the contract for the apartment sight unseen because they sent us a good-looking brochure."
Other practices Petraeus cautions against include calculating an item's price based only on the monthly payment instead of the total cost over time. She also strongly recommends that servicemembers who are in financial trouble consider all their options before taking an expensive loan. "If it's a true emergency that they need the money for, there are some military aid societies right there for them," she says, rattling off a list of resources the way some people explain a family tree.
"The Army Emergency Relief, the Navy-Marine Corps Relief Society, the Air Force has the Air Force Aid Society. And then there's the Coast Guard Mutual Assistance. So they're there to help with those emergency situations and they can give interest-free loans, sometimes even grants. So that would definitely be the best place to look. You know, you can't beat interest-free. And then there are other credit unions and banks that serve military installations, that would certainly be a place to look for a loan." She pauses, then adds, "I think probably one of the worst things you can do is go trolling on the Internet for a military loan. So many of those are not only expensive, but some are outright scams."
Petraeus talked more about her new role at the CFPB, and her financial advice for servicemembers and their families, in our video interview, conducted a few days before the bureau officially opened for business.
Loren Berlin is a columnist at DailyFinance.com. She can be reached at firstname.lastname@example.org. You can follow her on Twitter @LorenBerlin, and become a fan on Facebook.