State Treasurer Giannoulias Tackles 'Debt Trap' Issues

Business Ledger
November 6, 2009
Eder, Myra

Since stepping into the role of state treasurer in 2007, Alexi Giannoulias has worked aggressively to protect Illinois residents from the ills of predatory financial products. Teaming up with other officials, as well as banks and credit unions, his office has kicked off a number of "Escaping the Debt Trap" initiatives that target the likes of predatory lenders and credit card issuers. "The average Illinois family owes more than $8,000 in credit card debt, with interest mounting every month," according to the official. "Unfortunately, some people out there see all this as an opportune time to scam the unwary. In fact, there are more payday lenders out there in Illinois than McDonald's and Burger Kings." Giannoulias says small cash advances from payday lenders too frequently turn into debt that borrowers are unable to get out from under. Both consumers of payday loans and of credit cards, meanwhile, are being victimized by debt settlement companies that fail to deliver on their promises to help clients "pay only pennies on the dollars they owe," according to the treasurer. "We want to put them out of business and provide consumers with legitimate alternatives," he says. While such firms currently are not regulated in the state, the treasurer's office is lobbying to mandate licensing for them. Giannoulias' office already has seen some success in rein in credit card solicitation on college campuses; and at least two cities in the state are adopting the innovative Bank On outreach program that aims to help "unbanked" consumers find low- or no-cost financial products.

Web Link