Payday Loans Should be Regulated (Chicago Sun-Times)

August 20, 2004
Editorials, Featured Letter, pg. 56

The Chicago Sun-Times' feature on the financial pitfalls of payday loans in Illinois illustrated the human cost of an endless cycle of debt but failed to sound a legislative alarm on an essentially unregulated industry ["The 'wild, wild West' in loans," metro story, Aug. 15].

It should be no surprise that working families with a temporary cash shortage will turn to high-cost, short-term loans when they simply have no other options. What should surprise anyone is that legalized loan-sharking operates unchecked in nearly every disadvantaged community in the state.
Woodstock Institute, a public policy and advocacy organization dedicated to expanding safe and sound financial products in underserved communities, has proposed real changes for how payday lenders are regulated -- holding them responsible to common standards shared by the mainstream financial services industry.

Woodstock has proposed fairly priced loans to protect consumers from inescapable debt and a repayment plan for borrowers in default with no hope of reconciliation short of bankruptcy. There is precedent for these changes. In 2001, lllinois passed regulations to curb abuses in payday lending but they remain outmoded and cover only a fraction of all payday loans made in Illinois. While these recommendations have drawn considerable support from both neighborhood organizations and representatives of the payday loan industry, we have seen little indication that lawmakers and other officials in Springfield will throw their hats in the circle of real reform.

Surely, Illinois families deserve regulated, safe and sound lending instead of the wild, wild west in loans?

Marva Williams,
senior vice president
Woodstock Institute

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