Payday loans, which offer unsecured, short-term credit at an exorbitant rate, have been shown to target low-wealth communities and trap countless borrowers in a long-term cycle of debt. It is this cycle of debt that led dozens of community and consumer groups from across the state to demand an end to high-cost, unsustainable payday lending.
Among the many remaining barriers are public policies that make it difficult for people with disabilities to work and acquire the earnings necessary to build assets.
Debt settlement companies negotiate with creditors to reduce the amount of debt a borrower owes, unlike debt management companies or credit counselors, who work to achieve an affordable monthly payment. Consumer complaints about debt settlement companies to the Illinois Attorney General have skyrocketed in recent years. Consumers reported that many debt settlement companies promised to reduce debts substantially and charged high up-front fees but had low success rates in achieving debt relief.
Over the past two years, dozens of Chicago region consumer and community organizations called their legislators, participated in and convened roundtable discussions, signed on to letters, and went to Washington to call for real financial reform. They sent a clear message to Illinois legislators–the patchwork consumer protections that failed to prevent the foreclosure crisis and allowed widespread abuse in the consumer credit markets cannot continue.
While the bill is not perfect, it creates, for the first time, an independent agency dedicated to ensuring that consumers’ interests are protected. Homeowners struggling because of job loss, illness, or other hardship will be eligible for help with their mortgage. Mortgages will subject to important new anti-predatory lending protections. And regulators and the public will be newly empowered with data that will allow them to make sure financial institutions are fulfilling their commitments to their communities.
Sponsored by Sen. Kimberly Lightford (D-4) and Rep. Lou Lang (D-16), the proposal passed the Illinois Senate on May 5 by 58-1 and the House by 118-1 on May 26.
Creating a Small Business Lending Fund
President Obama continued his push last week for the creation of a Small Business Lending Fund that would increase capital to small financial institutions so that they would increase their small business lending. The Small Business Lending Fund Act (HR 5297) has passed out of the House Financial Services Committee and is likely to be voted on by the House this week. HR 5297 would also support several innovative state programs that encourage lending to small businesses.
L’Minggio’s story illustrates why it is so important that all automobile financing must be regulated by the consumer protection agency proposed by the House and Senate as part of the larger financial reform packages, regardless of whether that loan is made by a bank, credit union, or auto dealer. Woodstock opposes any exemptions for auto dealers from the consumer protections and regulations that will be issued by a new federal consumer protection agency.
Please sign on to the letter below by Wednesday June 9 at 12:00 CDT and tell House and Senate conferees that we need real and effective reform that protects Main Street, not a bill weakened by carve-outs and special interest loopholes.
Contact Tom Feltner at firstname.lastname@example.org or 312-268-0310 to sign on.
These are the kind of sobering statistics that experts presented to more than 100 representatives from community, research, financial, regulatory, and government groups at “Beyond Foreclosures: The Impact of the Financial Crisis on the Wealth Gap and Economic Opportunity.” Indeed, a staggering number of consumers lack sufficient access to banking services that would help them build wealth, do not have opportunities to build a positive credit history, and must resort to the costly and stigmatizing process of bankruptcy.