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FOR IMMEDIATE RELEASE
Monday, May 19, 2008
Contact:
Lynda Delaforgue, Citizen
Action/Illinois 312-427-2114 x3
Greg Brown, Metropolitan Family Services (312) 986-4261
Tom Feltner, Woodstock Institute 312-927-0391
Ohio
moves to cap payday loan rates
Action needed to protect Illinois borrowers
The Ohio General Assembly passed legislation last week
that would cap interest rates on payday loans at 28 percent – following several
other states that have taken steps to drastically curtail the triple digit
interest rates charged by payday installment lenders.
“Ohio
has taken the lead in protecting consumers from high cost debt,” says Lynda
Delaforgue, co-director of Citizen Action/Illinois. “Here in Illinois, business as
usual means a bad deal for consumers.”
In Illinois,
a loophole in the 2005 Payday Loan Reform Act, which set out strong consumer
protections for shorter term loans, has been used by lenders to evade the
act. Rather than abide by the fee cap, underwriting criteria and
protections against refinancing abuses, lenders have instead opted to offer
longer term, triple digit interest rate loans.
“Getting a short term loan in Illinois now means choosing between one with
strong consumer protections and one without,” said Tom
Feltner, policy director at the Chicago-based Woodstock
Institute.
Strong consumer protections that would protect every
borrower walking into a payday loan store are currently under consideration in
the Illinois General Assembly. The current proposal would substantially
lower the cost of borrowing, prevent over borrowing, or using the proceeds of
one payday loan to pay off another.
“Many working families are struggling to pay off these
predatory loans” said Greg Brown, Director of Social Policy at Metropolitan
Family Services. “This is a critical opportunity to protect consumers in Illinois.”
The Ohio Senate voted 29-4 to approve House Bill 545,
which passed the Ohio House two weeks ago. The bill limits interest rates
on payday loans to 28 percent annually. Ohio Governor Ted Strickland is
expected to sign the bill, according to several Ohio news sources.
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The Monsignor John Egan Campaign for Payday Loan Reform
was convened by the late Monsignor John Egan in 1999 after hearing the story of
one of his parishioners who was victimized by a payday loan. Monsignor
Egan was outraged at the story and took on payday loan reform as one of his
last fights for social justice. Monsignor Egan convened a group of
religious leaders, consumer advocates, public interest organizations, and
social service organizations forming the Campaign for Payday Loan Reform.
The Campaign was renamed after Monsignor Egan on October 2, 2001.
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