Monsignor John Egan Campaign for Payday Loan Reform
Recent posts by Monsignor John Egan Campaign for Payday Loan Reform
A bill introduced by Illinois Rep. Greg Harris to tackle the problem of unlicensed payday lenders, which generally operate online, passed out of the Illinois House of Representatives this week with a vote of 90-27 and moves on to the Senate for its approval. We applaud the representatives who voted to ensure that all Illinois consumers benefit from our state’s strong consumer protections, no matter where they choose to do business.
Illinois has made significant advances in protecting consumers from high-cost, short-term loans like payday and consumer installment loans, but more and more loans are originated online where state consumer protections are too often ignored. A bill introduced by Illinois Rep. Greg Harris would tackle the problem of unlicensed payday lenders, which generally operate online, by eliminating an unlicensed lender’s ability to collect on illegally-arranged loans.
On Friday, March 18th, Circuit Court Judge Carolyn Quinn ruled that Illinois Lending Corporation (plaintiff) did not meet the standards for issuing a Temporary Restraining Order (TRO).
The often criticized short-term consumer loan industry will face strict new consumer protections thanks to a new law signed by Governor Pat Quinn. Consumer advocates have long pointed to the high interest rates and back-to-back refinancing that have mired many borrowers in an endless cycle of debt as cause for a statewide crackdown on short-term credit abuses. We agree, and as members of the Monsignor John Egan Campaign for Payday Loan Reform, our organizations have spent over ten years working to pass practical reforms that would keep low-wealth borrowers out of a cycle of debt with interest rates exceeding 700 percent.
In a crackdown on 700 percent interest rate payday loans, Governor Quinn signed HB 537, capping rates and closing the legal loophole that has allowed some payday loan companies in Illinos to operate almost completely unregulated. Starting in March 2011, the law caps rates for nearly every short-term credit product in the state, prevents the cycle of debt caused by frequent refinancing, and gives regulators the tools necessary to identify potentially predatory lending practices before they become widespread.
High-cost consumer credit, extended with no consideration of a borrower's ability to pay it back, has stripped billions in wealth from Illinois communities since the beginning of the economic crisis. While lending reform is still being debated in Washington, the Illinois General Assembly passed strong consumer protections designed to cap rates for the often controversial payday lending industry.
Consumer advocates scored a significant victory today as the Illinois General Assembly passed strong consumer protections for high-cost installment loans and closed the payday loan loophole that allowed some payday companies to operate almost completely unregulated. As we move forward, we need your help to contact Governor Quinn and ask him to sign HB537, which puts an end to 700 percent payday and payday installment loans.
If you live in Illinois, call your State Senator and tell them to support the Consumer Installment Loan Reform Act (SB655 Amendment #1) today.
The Consumer Installment Loan Reform Act (SB 1435) was defeated in the House Executive Committee on Tuesday night with one aye vote, two nay votes, and eight present votes. SB 1435 would have ensured that all Illinoisans have access to credit with reasonable rates and protections to guard against the cycle of debt.