U.S. Sen. Dick Durbin (D-IL) reached out to leaders of Illinois community banks and credit unions Monday in search of ways to expand lending options to people typically trapped by payday lenders.
Through a letter, Durbin contacted President and CEO of the Illinois Credit Union League Tom Kane, President of the Community Bankers Association of Illinois Bob Wingert and President of the Illinois League of Financial Institutions Jay Stevenson.
“I would appreciate any suggestions you may have as to how we can work together to create a small dollar lending environment beneficial to borrowers, financial institutions, and the economy,” Durbin wrote. “I also encourage you to highlight the challenges that prevent your members from offering safe and affordable small-dollar loans. Consumers deserve better than predatory businesses that make extraordinary profits by trapping them in a debt spiral that leaves them financially worse off.”
Payday lenders are lenders who offer small-dollar loans using the borrower's next paycheck as collateral. Durbin said the interest rates on these loans can rise as high as 400 percent, and a study from the Consumer Financial Protection Bureau (CFPB) found that 4 out of 5 payday loans is renewed, leaving the borrower in increasingly greater debt.
Durbin previously joined a group of 30 other senators in applauding the CFPB for its efforts to rein in predatory lenders and encouraging it to go further to protect consumers from payday loans.
Alerts Sign-up