[Congressional Record Volume 147, Number 44 (Thursday, March 29, 2001)]
[Extensions of Remarks]
[Page E492]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 PAYDAY BORROWER PROTECTION ACT OF 2001

                                 ______
                                 

                           HON. BOBBY L. RUSH

                              of illinois

                    in the house of representatives

                        Thursday, March 29, 2001

  Mr. RUSH. Mr. Speaker, I rise today to introduce the Payday Borrower 
Protection Act of 2001.
  With a slowing economy, payday loan companies are springing up in 
storefronts all across America. Payday lenders provide short-term loans 
with minimum credit checks to consumers who are in need of ready cash, 
but these predatory businesses exist to exploit the financial situation 
many low- and middle-income families face. To the financially strapped 
consumer, these loans may seem like the answer to a prayer. However, 
with exorbitant interest rates ranging from 261% to 913% annually, 
these transactions are a recipe for disaster.
  Payday lenders often utilize ``loanshark'' tactics, such as 
threatening civil or criminal action against the borrower to pressure 
them into more expensive roll over loans. Fearing reprisal, borrowers 
sink further into debt. Similar to the Greek mythological character, 
Sisyphus, who was condemned to an eternity of rolling a boulder uphill, 
payday borrowers become trapped in a perpetual cycle of fees and 
payments which serve only to line the pockets of the payday lender. A 
1999 Indiana Department of Financial Institutions audit revealed that, 
on average over a twelve-month period, consumers renewed their loans 
ten times; one consumer renewed sixty-six times.
  Mr. Speaker, my bill would bring fairness to the payday loan 
industry. Specifically, it would:
  Require payday lenders to be licensed under state law;
  Place a ceiling of 36 percent on the annual interest rate a payday 
lender can charge;
  Limit the period of maturity of any loan to two weeks for each $50 of 
loan principal;
  Limit the principal amount of a payday loan to less than $300;
  Prohibit threatening criminal or civil action in order to force a 
borrower into rolling over a payday loan;
  Prohibit rolling over any deferred deposit loan unless 30 days has 
elapsed from the termination of any prior payday loan; and
  Provide a private cause of action, criminal and civil penalties for 
violation of this act.
  Mr. Speaker, I urge my colleagues to join me in ensuring that 
consumers are protected from the predatory practices of payday lenders 
by supporting the Payday Borrower Protection Act of 2001.

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