Military Personnel Financial Services Protection Act

MILITARY PERSONNEL FINANCIAL SERVICES PROTECTION ACT -- (House of Representatives - October 05, 2004)

Mr. BAKER. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 5011) to prevent the sale of abusive insurance and investment products to military personnel, as amended.

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Mr. BURNS. Mr. Speaker, I thank the gentleman for yielding me time.

I would like to thank the gentleman from Ohio (Chairman Oxley) of the Committee on Financial Services and the gentleman from Louisiana (Mr. Baker), the subcommittee chairman. I would like to thank my distinguished colleagues and the gentleman from Illinois (Mr. Emanuel) for their support and input.

I rise in strong support of H.R. 5011, the Military Personnel Financial Services Protection Act.

Mr. Speaker, I introduced H.R. 5011 to halt the fiscal abuse of our servicemen and -women by those in the life insurance and securities industry that use devious sales practices to collect exorbitant fees and sales commissions.

Further, H.R. 5011 is targeted at those who use our Federal military installations, both at home and abroad, as a shield to evade individual State insurance regulations and restrictions.

The 12th district of Georgia that I represent is home to many active duty, Reserve, and retired military personnel. I have Fort Gordon in Augusta; Fort Stewart in Savannah. I have the Naval Supply Course School in Athens. Georgia is represented by all branches of the military service: Army, Air Force, Coast Guard, Marines and Navy.

In recent months, my office had become aware of servicemen and -women residing in the 12th district and throughout the State of Georgia that have suffered financially as a result of dubious financial products and questionable insurance policies. Unfortunately, these questionable sales practices are not limited to the State of Georgia and have been found to be pervasive on our military installations within the United States and abroad.

Investigations into these practices are currently being conducted by the Department of Defense, the NASD, the Securities and Exchange Commission, and the State insurance commission regulators, including Georgia's commissioner of insurance, John Oxendine.

Let me provide my colleagues with a few unfortunate examples of what has happened just in Georgia.

Young recruits have been approached in group settings during boot camp and asked to fill out savings plan allotment forms that in truth turn out to be primarily payments for insurance premiums and sales commissions.

Junior enlisted personnel have been encouraged by senior enlisted personnel to participate in savings plans that are, in fact, insurance products.

Junior enlisted personnel and their superiors have received free meals at local restaurants and other gratuities as an enticement to participate in these illicit plans.

Junior officers have been provided free drinks and food at base officers clubs and then asked to participate in flawed mutual fund contracts that give the appearance of being endorsed by their chain of command.

Retired military personnel now employed by financial insurance firms have used their base and command access to inappropriately influence junior officers and enlisted personnel to participate in these questionable products.

Flawed mutual fund contractual plans that are disparaged by the financial and industry experts have been marketed virtually exclusively to our military personnel.

Outrageous as these may seem, sales agents banned from military installations in Georgia subsequently moved to Germany and continued their illicit sales practices to soldiers living abroad.

I will not, and I cannot, sit by and watch innocent servicemembers suffer from unscrupulous sales practices on our military installations. I say shame on those companies that allowed these practices to take advantage of our military personnel and shame on us for not acting sooner.

My staff has been in discussions with the Committee on Financial Services, the government regulators, corporate representatives, and independent financial experts to ensure that H.R. 5011 effectively addresses the illicit sales practice being encouraged by our armed services personnel and to prevent any unintended consequences.

H.R. 5011 does not target systematic investment plans or legitimate investment in insurance products, only those flawed mutual fund contractual plans and insurance contracts that require the payments of exorbitant fees and high front-loaded sales commissions.

As a bipartisan measure, H.R. 5011 has received overwhelming support from the various financial, insurance, and military organizations and support groups and has been reported out of Committee on Financial Services by a unanimous vote, bipartisan vote of 68 to zero.

Working together we can and we must act in a prudent manner to protect our servicemen and -women from harm caused by dubious financial products and questionable financial and insurance sales practices and policies.

I urge my colleagues to recognize the importance of acting to protect the financial interests of our armed services personnel and vote "yes" on this worthy resolution.

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