BLOOMINGTON – Over 150 people converged on Bloomington City Hall, in the midst of a cold and steady rain, to protest the high interest charged by payday lenders and demand a 36 interest rate cap on payday loans.
Illinois People’s Action led the exuberant rally prior to a council work session considering the issue. Protesters chanted, listened to addresses from leaders of the faith community, and prayed before entering the council session.
Once inside the council chambers, attendees listened to representatives from both the payday lenders and Illinois People’s Action.
Representing the payday lenders were Steve Brubaker, executive director of the Illinois Small Loan Association, and Craig Varga, a Chicago lawyer from the law firm Varga, Berger, Ledsky, Hayes and Casey.
Mr. Brubaker argued that legislation passed by the Illinois General Assembly and implemented this year, HB 537, regulates the industry. Attorney Varga claimed that city home rule does not allow for municipal legislation regulating payday lenders.
Representing Illinois People’s Action, Reverend Charlotte Dotts said that HB 537 brought down the interest rates charged by payday lenders but did not go far enough. She related that payday lenders are still charging 400% interest and entrapping people in a cycle of debt, compared to 1,200% before the legislation.
As pastor of Word of Life Ministries, Rev. Dotts spoke of her experiences attending to people who were victimized by payday lenders. She explained that 400% interest rates results in people paying back $800 on a $500 loan.
Rev. Dotts spoke of good credit lenders in the Bloomington-Normal community, such as credit unions that have short-term loan products with lower interest, but said that people are not aware of these alternatives and are deceived by payday advertising.
Rev. Dotts also argued that city attorneys, as well as attorneys for Illinois People’s Action, have said that home rule does permit municipal regulation of the interest charged by payday lenders.
In the work session that followed, many council members voiced strong support for a 36 cap on interest rates, including Jennifer McDade, Bernie Anderson, Mboka Mwilambwe, and Karen Schmidt.
In the final discussion, Mayor Stockton suggested that people on both sides of the issue address a set of five questions prior to a public hearing. In response, Jennifer McDade and Bernie Anderson wanted decisive action taken by the council, including the writing of a proposed ordinance to be considered by the public in a open hearing.
Alderpersons Judy Stearns and Jim Fruin said that they wanted a slower pace to the consider the issue. In closing, Mayor Stockton suggested that a proposed ordinance would eventually be drafted and a public hearing would be held to address it.
A later motion by Bernie Anderson, that the council discuss the issue at its October 10 meeting, failed by a 6-3 vote. The Council voted to put the discussion on the October 24 meeting agenda.