HR0295 96TH GENERAL ASSEMBLY

HR0295 LRB096 12427 KTG 25365 r

HOUSE RESOLUTION

WHEREAS, Working families of Illinois lose at least $220 million per year in unfair fees to predatory payday lenders through payday loans that are designed to trap borrowers in debt at annual interest rates in the range of 400%; and

WHEREAS, Academic research in recent years shows evidence that payday loans contribute to bankruptcy, loss of bank accounts, and credit card delinquency; and

WHEREAS, Payday lenders have purposefully modified their products to evade Illinois' consumer protections against unfair practices, specifically by lengthening their loan terms to 121 days to avoid the existing annual interest rate cap placed on payday loans; and

WHEREAS, Predatory lenders still charge upwards of 500% annual interest by using these evasions; and

WHEREAS, The current provisions of HR 1214, the Payday Loan Reform Act introduced by Representative Luis Gutierrez in the U.S. House of Representatives would not prevent such evasion of consumer protections by Illinois payday lenders; and

WHEREAS, By permitting interest rates of 391% for a typical payday loan HR 1214 would undermine state efforts to curb predatory payday lending; and

WHEREAS, HR 1214 would not address the fundamental predatory practice of making repeat, consecutive loans to borrowers who cannot afford to pay them off; and

WHEREAS, The only reform that has effectively stopped predatory payday lending in the states is a two-digit cap on annual interest rates; therefore, be it

RESOLVED, BY THE HOUSE OF REPRESENTATIVES OF THE NINETY-SIXTH GENERAL ASSEMBLY OF THE STATE OF ILLINOIS, that we call upon the sponsors of HR 1214 to withdraw their support of the current provisions in the legislation and instead support reforms that will be effective in stopping the payday lending cycle of debt, and only support proposals that do not undermine state efforts to reform the practice; and be it further

RESOLVED, That members of Congress, with all due expedience, should enact a cap on annual interest rates of 36%, as a means of immediately stopping the flow of earnings unfairly stripped from working families to predatory lenders.