Consumer Lending Reform
Woodstock Institute identifies the negative effects of high-cost consumer credit and works to end the worst practices among payday lenders, installment lenders, and other consumer lenders.
Woodstock Institute and Americans for Financial Reform (AFR) reached out to key Senators on Tuesday to express their support for interstate lending reform, which would ensure that out-of-state lenders could no longer supersede state interest rate limits that apply to local banks, credit unions, and other lenders.
As debate begins on the Senate financial reform bill, the strong consumer protections contained in the Restoring American Financial Stability Act (S. 3217) will surely come under assault from special interests and their armies of lobbyists—and not all of them are from big banks.
High-cost credit, extended with no consideration of a borrower's ability to pay it back, has stripped billions in wealth from Chicago region communities since the beginning of the economic crisis. While lending reform is still being debated in Washington, policymakers in Springfield have finally recognized that at least one form of high-cost credit - payday installment lending - cannot continue to operate in Illinois without a basic set of ground rules. The Monsignor John Egan Campaign for Payday Loan Reform agrees and publicly supports one proposal, Senate Bill 655, which will finally put an end to predatory payday installment loans with rates that too often top 1,000 percent.
If you live in Illinois, call your State Senator and tell them to support the Consumer Installment Loan Reform Act (SB655 Amendment #1) today.
Last week, the Monsignor John Egan Campaign for Payday Loan Reform and Woodstock Institute called for much-needed consumer protections for the currently unregulated payday installment loan industry at a press conference in downtown Chicago. These new consumer protections, included in a recent proposal by Senator Kimberly Lightford (D-Maywood), would ensure reasonable fees in an industry that has operated for years outside the consumer protections established in the 2005 Payday Loan Reform Act.
Credit unions can offer sustainable, affordable short term credit at a fraction of the cost of traditional payday lenders, says a recent report by Marva Williams, until recently Woodstock Institute senior vice president.