CHICAGO -- Lieutenant Governor Pat Quinn joined with the “Monsignor John Egan Campaign for Payday Loan Reform” to stop the payday loan industry from driving hardworking people into an endless cycle of dept by pushing for approval of House Bill 4876 and Senate Bill 1048 -- legislation to regulate the Illinois payday loan industry.
The sponsor for HB4876 is Representative David Miller (D-Calumet City). Sponsoring SB1048 is Senator Jeff Schoenberg (D-Evanston).
“This legislation is part of a nationwide campaign to protect everyday people who become trapped on this debt treadmill,” Quinn said. “For far too long the payday loan industry has plunged into the pockets of average citizens --including our military personnel -- and we need to take aggressive measures to stop these usurious practices.”
The payday loan industry makes short-term loans at high interest rates to working people. Under the industry’s current system, an occasional user can quickly and easily fall victim to exorbitant interest rates -- as high as 1,300% in Illinois -- forcing users to repeatedly renew the loan and incur new charges.
The proposed legislation would license and regulate lenders of short-term loans by extending the term of the loan, set an interest-rate cap on administrative fees, and limit the number of rollovers to two when the outstanding balance has been reduced by at least 20%.
“Not only do we need reasonable interest rates and terms, we need plain language agreements,” Quinn said. “This industry has an obligation to offer its consumers sensible products and services. Instead, they’re practices have consign users to a spiraling cycle of debt.”
In Illinois, credit unions and some lending institutions are subject to the Federal Community Reinvestment Act, which is designed for lenders to help meet the credit needs of the communities in which they operate by offering safe and sound banking operations. Payday loan centers and currency exchanges are not subject to the community reinvestment act.
Most recently, there has been an increase in payday loan centers near Illinois military bases. Near the Great Lakes Naval Training Center, which is home to the largest naval training facility in the country, there are over 15 payday loan centers.
“The financial pressures of being called to active duty places our military personnel at a greater risk, and predatory lenders have honed in on this weakness by setting up on main roads,” Quinn said.
Quinn was joined by the Navy-Marine Corps Relief Society Great Lakes and members of the Monsignor John Egan Campaign for Payday Loan Reform, which includes the Woodstock Institute, Citizen Action Illinois, Catholic Diocese of Joliet, Coalition for Consumer Rights, Illinois PIRG and Metropolitan Family Services.
Monsignor John "Jack" Egan was a priest whose battles for social justice made him one of Chicago's most influential religious leaders. Egan served the Roman Catholic Church for 58 years.