Why Is The Pentagon Worried About Consumer Protection?

Those fighting for the consumer financial protection agency just got a new ally with unparalleled battle strategy know-how, literally. The Defense Department has come out in support, according to Politico. It's reportedly worried about U.S. armed forces getting ripped off by banks and finance companies. I'm a little confused as to why.

Politico says:

Auto dealers, a powerful local constituency with outlets across the nation, won the first round of their own battle against new consumer protection rules, successfully lobbying House members for an exemption from oversight by the stand-alone consumer financial protection agency.

The Pentagon's concerns were raised in a Feb. 26 letter from Clifford Stanley, undersecretary of defense for personnel and readiness. He said that "unscrupulous" lending by auto dealers has hurt troops -- and has even prevented them from being deployed, as some groups have documented. That may blunt the sympathy the National Automobile Dealers Association members received during the House debate.

"Predatory lending affects our military preparedness. That's how outrageous it is to not include these guys" in the consumer entity's oversight, Mierzwinski said. "It explains that this is not just some liberal position."

Firstly, if you're going to have a consumer financial protection agency, the idea that auto dealers would be exempt is rather ridiculous. Auto loans are easily among the top three largest areas of consumer finance, along with mortgages and credit cards.

But what's odd is that the military would be so concerned with consumer protection. I find this strange because all U.S. armed forces are eligible to do their banking with USAA, a special bank founded by Army officers, which seeks to provide high quality, low cost banking products to members of the military and their families. Its website explains its mission:

The mission of the association is to facilitate the financial security of its members, associates, and their families through provision of a full range of highly competitive financial products and services; in so doing, USAA seeks to be the provider of choice for the military community.

From what I have heard, USAA is pretty great. And I would also note that auto loans are among its robust product offerings. So if the U.S. armed forces are aware of this alternative (and they generally are), why is the Defense Department so concerned about other bad lenders? If anyone should be relatively content with consumer lending practices, it's the Pentagon since the military has the benefit of using USAA.