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| 1 | HOUSE RESOLUTION
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| 2 | WHEREAS, Working families of Illinois lose at least $220 | ||||||
| 3 | million per year in unfair fees to predatory payday lenders | ||||||
| 4 | through payday loans that are designed to trap borrowers in | ||||||
| 5 | debt at annual interest rates in the range of 400%; and
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| 6 | WHEREAS, Academic research in recent years shows evidence | ||||||
| 7 | that payday loans contribute to bankruptcy, loss of bank | ||||||
| 8 | accounts, and credit card delinquency; and
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| 9 | WHEREAS, Payday lenders have purposefully modified their | ||||||
| 10 | products to evade Illinois' consumer protections against | ||||||
| 11 | unfair practices, specifically by lengthening their loan terms | ||||||
| 12 | to 121 days to avoid the existing annual interest rate cap | ||||||
| 13 | placed on payday loans; and
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| 14 | WHEREAS, Predatory lenders still charge upwards of 500% | ||||||
| 15 | annual interest by using these evasions; and
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| 16 | WHEREAS, The current provisions of HR 1214, the Payday Loan | ||||||
| 17 | Reform Act introduced by Representative Luis Gutierrez in the | ||||||
| 18 | U.S. House of Representatives would not prevent such evasion of | ||||||
| 19 | consumer protections by Illinois payday lenders; and
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| 20 | WHEREAS, By permitting interest rates of 391% for a typical | ||||||
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| 1 | payday loan HR 1214 would undermine state efforts to curb | ||||||
| 2 | predatory payday lending; and
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| 3 | WHEREAS, HR 1214 would not address the fundamental | ||||||
| 4 | predatory practice of making repeat, consecutive loans to | ||||||
| 5 | borrowers who cannot afford to pay them off; and | ||||||
| 6 | WHEREAS, The only reform that has effectively stopped | ||||||
| 7 | predatory payday lending in the states is a two-digit cap on | ||||||
| 8 | annual interest rates; therefore, be it | ||||||
| 9 | RESOLVED, BY THE HOUSE OF REPRESENTATIVES OF THE | ||||||
| 10 | NINETY-SIXTH GENERAL ASSEMBLY OF THE STATE OF ILLINOIS, that we | ||||||
| 11 | call upon the sponsors of HR 1214 to withdraw their support of | ||||||
| 12 | the current provisions in the legislation and instead support | ||||||
| 13 | reforms that will be effective in stopping the payday lending | ||||||
| 14 | cycle of debt, and only support proposals that do not undermine | ||||||
| 15 | state efforts to reform the practice; and be it further
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| 16 | RESOLVED, That members of Congress, with all due | ||||||
| 17 | expedience, should enact a cap on annual interest rates of 36%, | ||||||
| 18 | as a means of immediately stopping the flow of earnings | ||||||
| 19 | unfairly stripped from working families to predatory lenders.
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