State Payday Loan Fight a Madigan Family Affair

Chicago Sun-Times
August 30, 2010
Novak, Tim; McKinney, Dave

Efforts to crack down on payday lending in Illinois were rewarded last spring with the passage of a law setting new limits on the interest rates lenders charge and expanding the state's tracking system to ensure that consumers are not borrowing more than they can repay. At the forefront of the legislation were members of the Madigan family: state Attorney General Lisa Madigan, whose staff drafted the measure; her father, House Speaker Michael Madigan (D-Chicago), the Illinois Democratic Party chairman, who endorsed the bill and voted for it; and lobbyist Jordan Matyas, who helped the A.G.'s staff write the legislation and has since married the speaker's daughter. Now, Matyas' client, Veritec Solutions, which will track payday loans and other unsecured loans for the state of Illinois, stands to make a large profit. The company expects its business to grow by as much as 900 percent after the new legislation takes effect on March 21. Payday lenders have circumvented previous restrictions on interest rates by lengthening the terms of the loans -- meaning they could charge more and also did not have to report to Veritec -- and Veritec hired Matyas to help address this loophole. The new legislation will create two new kinds of short-term consumer loans, set new caps on interest rates, and require short-term consumer lenders to report all of their loans to Veritec in order to help state officials ensure that consumers do not borrow more than 25 percent of their gross monthly income.
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