can least afford them, U.S. Sen. Dick Durbin said Tuesday at a press
conference to build support for his legislation that would prevent
payday-loan companies from charging exorbitant interest rates to
“American families are struggling in one of the toughest economies
of all time; they are trying to make ends meet,” Durbin said. “These
excessive rates are often hidden and can have crippling effects on
those individuals who can afford it least.”
Durbin’s bill, the “Protecting Consumers from Unreasonable Credit
Rates Act,” proposes a federally regulated maximum interest rate of 36
percent to replace the triple-digit rates many cash-advance lenders
Financially strapped customers endure average interest rates of 400
percent, rapidly driving up their outstanding balances far beyond the
amounts of their original loans, a congressional committee found in
Joining Durbin in his plea were Dory Rand, president of Woodstock
Institute; Lynda DeLaforgue, co-director of Citizen Action/Illinois;
and Ed Jacob, manager of North Side Community Federal Credit Union.
“Unfortunately for the consumer, every time policymakers in
Illinois take one step forward, the industry finds a way around it and
we take two steps back,” Rand said. “That’s why we need a federal law.”
“People need access to good and clear credit,” DeLaforgue said.
“But we don’t need access to unfair, predatory loans that strip people
of their dignity, strip people of their assets and send them into
Bankruptcy is precisely the situation Ramona Bonilla is facing.
Bonilla, introduced by Durbin at the press conference, said payday
loans drove her to bankruptcy.
Barilla, 37, lives in the northwest side of Chicago and originally
took out a loan of $600. Soon after, she owed double, then had to take
out another loan to pay off the amassing interest.
“It got harder for me to pay, so now I’m just going to do
bankruptcy,” she said after the conference. “There is no other choice.”
Durbin introduced the bill in late February. He said he is looking
for co-sponsors for the legislation and hopes it will be passed in 2009.
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