Capitol News Illinois, Jan 10
By PETER HANCOCK
SPRINGFIELD – As the General Assembly’s lame duck session moved into its third day, lawmakers in both chambers turned their attention to a sweeping bill aimed at narrowing economic disparities faced by Black and brown communities in Illinois.
That is one of the four pillars that make up the Illinois Legislative Black Caucus’ agenda, which has been the focus of the lame duck session thus far.
The proposed Economic Equity Act, House Bill 5871, was introduced Thursday by Rep. Sonya Harper, D-Chicago, and like many of the other bills being pushed by the ILBC, it drew general praise for its intent, but criticism over a number of specific parts.
The bill also contains provisions to put more restrictions on companies that offer small-dollar loans such as payday loans and vehicle title loans. Provisions include capping the interest rate they can charge at 36%, the same cap that applies under federal regulations for loans to members of the military.
Steve Brubaker, of the Illinois Small Loan Association, which represents companies that offer short-term, small-dollar loans, said that under current law, payday lenders are allowed to charge a fee of $15.50 per $100 borrowed for a two-week period. Capping interest rates at 36%, he said, would translate to to just $1.38 per $100 borrowed, which would effectively force payday lenders out of business.
“We can’t operate at $1.38,” he said. “We can’t pay somebody to do the paperwork on the loan at $1.38.”
Brubaker also defended the industry, arguing that the loans they make circulate through the community because people use them to pay for emergency expenses such as plumbing repairs or funerals.
… Brent Adams of the Chicago-based Woodstock Institute, a group that advocates for fair housing and lending policies, argued that payday loans actually do the opposite because the lenders take the money back at what amounts to a 297% annual interest rate.
“For decades, predatory consumer loans have stripped billions, predominantly from families of color, trapping them in cycles of debt, making it impossible for them to build wealth and causing them to forego other expenses like health care and prescription drugs,” Adams said.