Last weekend, the Tribune reported on how the payday loan industry has been pumping campaign contributions into Springfield in advance of legislative efforts to curb predatory lending practices in Illinois. One observer noted that the industry will continue to rake in big profits as long as the pending legislation is postponed:
"If they can delay a policy, then that's to their advantage," [Kent Redfield, a political science professor at the University of Illinois at Springfield] explained. "These are smart people. They wouldn't be giving money if it didn't have an impact."
If delaying reforms was the objective, the industry appears to have accomplished its mission this legislative session. The bill aiming to cap interest rates for longer-term payday loans passed in the Senate earlier this year, but will not come up for a vote in the House before the end of the month, said Rep. Julie Hamos (D-Evanston), who sponsored the House version:
[Hamos] said the issue is too complicated to address effectively before the Legislature's summer adjournment, possibly in the next few weeks. She said the measure may be ready for a final vote when lawmakers return to Springfield in the fall.
"We're just trying to enact some reasonable regulations so borrowers are not getting gouged," Hamos said. "... I'm not trying to drive [payday lenders] out of business."
Of course, the payday loan business model depends on "gouging" borrowers and thus trapping them in a cycle of high-interest debt. As a former industry employee recently told an Ohio ABC News affiliate," That's their bread and butter. That's what they depend on is repeat customers. Every two weeks, you pay it off on a Friday, you come back on a Saturday and re-borrow."
(Image used under a Creative Commons license from Flickr user swanksalot)
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