In these days when “reform” supposedly is the mantra in Springfield, business as usual continues, well, as usual. The only thing that’s surprising is the sheer audacity of the players.
A prime example is what didn’t happen late last month on a bill to put more limits on the payday loan guys. You know, the good folks who say they’ll lose their shirts helping worthy citizens if they can’t charge interest rates of 300% or 400%.
The bill, a top priority for Illinois Attorney General Lisa Madigan, got a grand total of one vote in the Illinois House committee in which it had been dumped. Yes, one vote. Neither House Speaker Michael Madigan (Lisa’s dad) nor anyone else offset the squads of connected lobbyists who pulled strings to kill the bill — and likely will pull out their checkbooks again when lawmakers are raising cash for their next campaign.
Ah . . . the sweet smell of reform!
Limits on payday lending and related loans that some call “predatory” were a hot issue a few years ago. In fact, the issue got so much ink in 2005 that lawmakers imposed limits on loans that had to be paid off within 120 days.
The response by much of the payday lending industry was to continue the same high fees and rates, but to apply them only to loans with a term of 181 days and the like.
Since then, a few legislators have been trying to rework the law, and this session they came up with a proposal that got support not only from expected sources like unions and religious leaders but a fair number of payday lenders.
Specifically, the measure sponsored by state Rep. Julie Hamos, D-Evanston, would cap interest rates on loans of up to $4,000 at “only” 99%, limit payments to 20% of a borrower’s monthly income, require lenders to verify borrowers’ ability to pay and effectively ban huge “balloon” payments at the end of the loan term.
Now, I’m not without sympathy for payday lenders. I understand why some, as a matter of libertarian principle, oppose any usury limits. The lenders are entitled to make a buck, and bills like Ms. Hamos’ surely would cut off some poor folks from access to credit.
But not everyone deserves access to credit all the time. Subprime lending to those with subprime finances arguably is the main reason why the nation is caught in the worst downturn since the Depression. If the industry has to clobber many low-income families with killer rates to make up for other borrowers who default, maybe the industry ought to tighten its lending standards.
Perhaps arguments like that convinced six Democrats and three Republicans on the House Executive Committee to vote “present,” which had the same impact as a “no” vote. Or perhaps it was someone else.
Like Victor Reyes, a former top political aide to Mayor Richard M. Daley who now lobbies for payday lenders. Four of the six Dems who didn’t vote are Hispanic, and Mr. Reyes ran the legendary Hispanic Democratic Organization.
Like Rob Uhe, who lobbies for a Dallas-based payday lender and happens to be a former counsel to Mr. Madigan, who could have put the Hamos bill in another committee but let it go to a panel where its fate was clear from the beginning.
Like former Democratic state Rep. Bob Molaro, another payday loan lobbyist. Or, my personal favorite, Kim Morreale, who is married to state Rep. Michael McAuliffe, R-Chicago, and lobbies for payday lender AmeriCash. (One GOP source notes that Ms. Morreale was in the lobbying biz before she got hitched, but it must be nice to review the roll call with someone a pillow away.)
Oh, did I mention that groups opposed to the Hamos bill have donated more than $540,000 to Illinois pols since 2000? The biggest recipient (appropriately): Rod Blagojevich. The second-highest, former state Rep. Brent Hassert, R-Romeoville, now lobbies for — you guessed it — a payday loan group.
Ah . . . the sweet smell of reform!
Word has it that state Rep. Lou Lang, D-Skokie, may take over sponsorship of the bill from the sometimes abrasive Ms. Hamos. Since reform has arrived in Illinois, Lou, I’m sure passing something will be a snap.
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