Statements on Introduced Bills and Joint Resolutions

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S. 1028

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Ms. COLLINS. Mr. President, I am pleased to join with Senator CLINTON on legislation that will address the persistent problems that we have experienced with the sale of inappropriate life insurance and investment products to our servicemen and women. Although these issues were newly publicized last year in a series of articles in the New York Times, these problems actually go back for decades according to a 2002 Defense Department report.

According to that report, deceptive practices have been employed to sell unnecessary and inappropriate financial products to our military for more than thirty years. Furthermore, these sales have been in violation of DoD's policies aimed at regulating the sale of commercial products on military bases.

One of the report's most alarming findings is that these practices have a ``clear and present'' effect on morale, discipline and unit integrity. It states:

Service members who have been coerced or deceived into buying insurance on a military installation blame not only the sales agents. The victims blame their military superiors for placing them in a position to be misled. The trust and respect that military leaders seek to instill in their subordinates are clearly reduced among those who have bought insurance that is of little or no value to them. This adversely affects the unit integrity.

The author of this study, an Army General and lawyer, spoke to numerous victims of these deceptive sales practices. He stated in his report that these soldiers told him that they had less trust in their military superiors after these incidents. They also expressed a reduced interest in reenlisting.

With so many of our troops in harm's way, it is time for Congress to take decisive action on this matter. Although DoD has issued another set of draft regulations, it is barred by statute from implementing these reforms until this fall. Moreover, I am not convinced that merely tightening the regulation of such sales on base will have the desired outcome of significantly reducing the sale of inappropriate insurance products.

The Clinton-Collins legislation would: establish a requirement that DoD provide real financial education for service members and their spouses; provide for financial counselors at military bases; and require that junior enlisted personnel receive information on their federally provided life insurance before allotting part of their pay toward the purchase of private life insurance products.

These provisions reflect the problems and deficiencies identified by DoD's own report. Specifically, the report concluded that DoD's current personal financial education programs were inadequate, noting particularly that the education provided enlisted personnel was ``substantially less than that provided to junior officers.'' It is our belief that providing military personnel with a sound financial education and access to information is the best method of providing them and their families with the protection that they deserve.

While that report went much further in its recommendations, even recommending that such sales be barred, our legislation provides for more moderate measures in the hope that we can make real progress on this matter without resorting to extreme measures that would unfairly punish the countless ethical insurance agents who responsibly serve the military life insurance market. Instead, our legislation would give our troops the tools to protect themselves against those who engage in these abusive and deceptive sales practices.

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