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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