Yesterday Elizabeth Warren, Assistant to the President and Special Advisor to the Secretary of the Treasury for the Consumer Financial Protection Bureau, announced that she's hired Holly Petraeus to set up an Office of Servicemember Affairs within the CFPB. Petraeus was formerly Director of the Better Business Bureau Military Line. Her husband, General David Petraeus, commands the U.S. forces in Afghanistan.
This hire reflects concerns about the 300,000 American troops who serve overseas, who along with their families "are sometimes easy targets for unscrupulous lenders," Warren wrote in a White House blog. "Even families that stay with mainstream lenders can struggle as the impact of separation and frequent moving takes a financial toll, leaving a family mired in debt and trying to digest reams of fine print."
Indications are that scammers who target the military will be Petraeus' first focus. In an November article in USAA magazine, Petraeus was quoted as saying, "You see that strip outside installations -- the pawn shops, the tattoo parlors, the shady auto dealers. I once heard those businesses described as bears lined up at a trout stream."
But traditional financial service providers' military offerings will be scrutinized as well. "Recently-enlisted service members often experience their first steady paycheck and their first opportunity to be lured into easy credit offers," Warren says. "Far too many also get tangled in debt traps."
Military surveys have found that finances are service members' second top worry, behind only work and career concerns and ahead of deployments, health, life events, family relationships and war/hostilities. The Department of the Navy reported in 2007 that financial management issues accounted for 78 percent of security clearance revocations and denials for Navy personnel.
"Those who serve in the military should be able to focus on their jobs and their families without having to worry about getting trapped by abusive financial practices," Warren says.
In her role at the new agency, Petraeus will work with the Department of Defense to help ensure that military families receive financial education; that complaints and questions from military families are monitored and responded to; and that federal and state agencies coordinate their activities to improve consumer protection measures for military families.
Warren and Petraeus plan to visit Lackland Air Force base in San Antonio this month to hear from service members and financial counselors about the unique lending circumstances and challenges facing military communities. "In this and in our later trips, we will ask many questions, listen to our troops, and apply what we learn directly to our efforts," Warren says.