Adams: Payday Loans, Subprime Mess, Foreclosures Share Root Problem

Peoria Journal Star (IL)
April 14, 2010
Adams, Pam

Peoria Journal Star columnist Pam Adams asserts that if the federal government's financial leaders and regulators had patrolled the consumer lending industry earlier and more effectively, they might have "discovered and defused financial weapons of mass destruction before they imploded in many communities and nearly blew up the economy." According to Adams, citizens have recognized what the experts did not: that risky loans with interest rates of up to 400 percent were being extended to the borrowers least likely to afford them. Illinois Peoples' Action (IPA) organized an April protest outside of Advance America to coincide with a regional community meeting on the foreclosure crisis. The even was held at a local church, where ministers spoke of the foreclosure crisis in Chicago and surrounding communities and homeowners described their frustration with the government's foreclosure-prevention initiative, Home Affordable Modification Program (HAMP). The IPA is calling for a moratorium on foreclosures while borrowers are going through the HAMP process and petitioning for a mandate requiring banks that received TARP funding to participate in the program. Don Carlson, director of IPA, lambasted the loopholes in Illinois' payday lending legislation, calling them "big enough to drive a truck through." Adams concludes, "There is a direct line from subprime installment loans to subprime mortgages and it leads to a free market that won't correct itself without pressure."

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