WASHINGTON,
D.C. -- Payday lending is costing my constituents and people in Illinois
millions of hard-earned dollars. In Illinois the cost of a payday loan
is typically 20% of the amount borrowed. Payday lenders in Illinois
on average charge consumers an annual percentage rate of 560%.
Consumers
who use payday lenders are often unable to pay off these exorbitant rates.
Instead they are forced to take out another loan to pay for rent, food
and other necessities. That’s a vicious financial cycle. According
to Illinois Department of Financial Institutions, 82% of consumers take
out more than 4 loans in a given year. Over fifty percent take out
11 loans or more.
Why
are consumers forced into payday loan stores? The answer is that
most of the
consumers
who use payday loans do not have access to conventional loans and many
struggle to make ends meet. According to the Wood Stock Institute
that the typical borrower has an annual income of $23,690. Only 12%
earn $40,000 or more.
Our
voices are finally being heard. Our coalition is leading the charge
to stop payday lenders from using bank charters to avoid state and local
consumer protection laws.
Recently
Brickyard Bank announced that it is ending its affiliation with Check’n
Go. I applaud Brickyard Bank CEO David Keller for ending the banks'
affiliation with this notorious payday lender.
Payday
lenders have even had the chutzpah to claim that they actually help banks
comply with CRA. That’s what Check’n Go tried to claim in its merger
proposal with Bank of Kenney. The truth is this notorious payday
loan operator want to use the merger to expand its operation and to use
the bank charter to avoid state consumer protection laws. I joined
Representatives Rush, Davis, and Jackson in calling on the Federal Reserve’s
Chairman Greenspan to deny the merger.
The
payday lending industry needs to be held accountable to consumers.
Their fees need to be capped and consumers need to be informed of their
rights under federal and state laws. Payday lenders should not be
able to lie and deceive consumers. We need to pass Payday lending
legislation and stop this industry from exploiting consumers. |