Editorial: California Legislature Whiffs on Reining in Payday Loans

September 19, 2013
Fresno Bee 
payday lending news

This Fresno Bee editorial criticizes the California Legislature for failing to get a bill out of the banking committee to protect citizens from usurious lending. California remains among the most lax states when it comes to payday lending. Eighty-two percent of the fees in the state -- $474 million -- come from borrowers taking out a new loan within two weeks of paying off their last loan. The editorial notes that other states and the federal government are acting. Fifteen states and the District of Columbia have similar caps for all payday loans. Some states get at the problem of repeat borrowing by setting an annual cap on the number of payday loans that lenders can give to any borrower. New York and Maryland are going after the banks that allow online payday lenders to automatically withdraw loan payments from their customers' accounts.

Meanwhile, Consumer Financial Protection Bureau Director Richard Cordray has indicated that the new federal bureau would begin making rules "in the near future." The California Legislature did pass Senate Bill 318, which would establish a pilot program for loans from $200 to $2,500, with an annual percentage rate capped at 36 percent. However, the editorial concludes that "this is no substitute for reining in payday loans, a task for the next session."

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