Rep. Chesney writes editorial with Democratic Rep. Guzzardi on ‘exploitative’ loans
FREEPORT, Ill. (WIFR) – Rep. Will Guzzardi (D-Chicago) and Rep. Andrew Chesney (R-Freeport) jointly drafted an editorial notice on their mutual interest in predatory loan protections on Monday.
You can read the op-ed in its entirety below.
“We are two legislators who do not agree on much.
One of us is a Democrat from Chicago who co-chairs the Illinois House Progressive Caucus. The other is a Republican from Northwestern Illinois who is a spearhead for conservative causes.
Despite these obvious ideological differences, we came together this summer on an issue close to our hearts: curbing excessive interest rates on payday loans.
A payday loan is a short-term loan that is supposed to keep a family afloat until the next paycheck. It is intended as a tool of last resort for people leaning against the wall.
The payday loan industry knows that its customers are desperate and that they have not been sufficiently prevented from taking advantage of that desperation. Payday loans could be issued at annualized interest rates greater than 400%.
Securities lending isn’t better – and maybe even worse. With equally mind-boggling interest rates, these products are backed by the title on his car. Non-payment usually results in confiscation of the vehicle.
Most of the big players in payday lending and securities lending are big outside chains that come into our communities, extract money from our most vulnerable neighbors, and give little in return. They profit from desperation, knowing that the high default rate on their loans cascades their clientele in financial jeopardy while continuing to profit.
Since last summer, we have worked with a group of advocacy organizations to tackle this problem. The Heartland Alliance, the Woodstock Institute, and other groups have been very helpful in developing a proposal to cap interest rates on these products at 36%. It’s still terribly high – double what you could pay even with credit card debt – but it’s starting to protect those who are being exploited by shady out-of-state lenders.
While there are significant ideological differences over the main tenets of the economic justice pillar of the Black Caucus agenda adopted in January, this short-term loan reform was a proposal that drew broad bipartisan support from both very conservative like me (Andrew) and very progressive. like me (Will). The reform measure has been adopted and is currently awaiting the governor’s signature.
We believe that no matter where you fall on the ideological spectrum, you can agree that a 400% annualized interest is outrageous. The hardship imposed on vulnerable Illinois residents by these lenders of last resort is wrong. Whether you are progressive or conservative, or just care about the well-being of your fellow Illinois citizens, we believe this measure will make our state a better, fairer and more decent place, ”said Guzzardi representatives. and Chesney.
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