Tribune Paints Ugly Pic of Pay Day Lenders
The front page of the Chicago Tribune's Business section paints a pretty unflattering picture of the pay day loan industry today, centered around efforts by Citizen Action/Illinois and others to close a loophole in 2005 Pay Day Loan reforms (SB 1993 - Lightford).
The 2005 reforms applied to all loans of 120 days or less. The industry responded by increasing the terms of their loans to 121 days or more. Is anyone shocked?
From the story:
- Resulting interest rates have increased to 279 percent (from 140 percent in 2004);
- Lenders have refused to disclose data to state regulators on the new loans;
- A study of lawsuits filed by AmeriCash, one of the industry's largest lenders, shows women, minorities, and low-income borrowers are bearing the brunt.
Brian Hynes, a lobbyist for AmeriCash, rebutted the groups' findings, saying the court cases are only a "snapshot" of the firm, which has "thousands of customers."The lack of self-reflection by the industry is probably why things aren't going so well for them. After attempts to negotiate with lenders failed in the Senate [amid allegations of stonewalling], Sen. Lightford moved the measure out of the Senate last week on a rollcall of 54-0.
Apparently, even Senate Republicans are smart enough to figure out that its a bad idea to side with folks who charge 279 percent interest when lenders are seizing homes all over the state.
But the industry doesn't appear to be deterred by that 54-0 rollcall:
"Steve Brubaker, a lobbyist for the Illinois Small Loan Association, which represents about half the state's lenders, said that his group supports the extension, but with compromises expected to be carried out in the House."Neither does Governor Rod Blagojevich, whose Illinois Department of Professional Regulations is backing a {can you say 'watered down'?} version (SB 862 - Collins):
"State officials are backing Senate Bill 862, which, said Hofer [IDPR spokeswoman], would impose the protections and interest rate ceiling on short-term consumer loans."It's worth pointing out that SB 862 is currently a shell bill, which does none of the things Hofer claims at this point, and that its still stuck on third reading in the Senate. Oy.
SB 1993 is backed by: Citizen Action/Illinois, Heartland Alliance, Metropolitan Family Services, Protestants for the Common Good, Sargent Shriver National Center on Poverty Law, and Woodstock Institute
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