Los Angeles County officials Tuesday urged residents to contact their state senators to express support for a bill that would cap interest rates charged on personal loans of $2,500 to $10,000 at 36%.
Supervisors Hilda Solis and Sheila Kuehl were joined by faith leaders and the victim of a predatory loan on the steps of the Kenneth Hahn Hall of Administration downtown as the group called for passage of Assembly Bill 539.
“For far too long, low-income communities of color have been taken advantage of by unscrupulous lenders,” Solis said. “High-cost loans trap consumers in loans that they cannot afford to repay, undercutting their financial well-being and impacting their businesses, their family and their communities.”
The bill, introduced by Assemblywoman Monique Limon, D-Santa Barbara, and sponsored by the county, passed the Assembly last month on a 60-4 vote, but it faces tougher opposition in the Senate.
“We are up against an incredibly well-funded and aggressive opposition who are misrepresenting the impacts of these loans on the financial well-being of California consumers,” Limon said, crediting the county’s sponsorship as key to organizing a broad coalition of support.
Predatory lending has escalated over the last decade and Solis cited estimates that more than 350,000 loans granted to Californians annually carry triple-digit interest rates.
“This sensible and compromise approach ensures that lenders will be incentivized to underwrite loans to borrowers who have a reasonable ability to repay them,” Solis said.
Kuehl agreed it was time to protect families from payday lenders.
“We can’t keep letting payday lenders, and the financial industry that supports them, keep families in debt while enriching themselves,” Kuehl said. “They are causing devastating financial hardship to families that are struggling simply to keep a roof over their head, their children fed and their medical bills paid.”
The Rev. Kevin Sauls, Rabbi Joel Simonds and Father Esparza spoke about the hardships suffered by their parishioners who relied on high-cost loans. Thelsa Colindres, a borrower, told the assembled crowd that these kinds of loans only heighten financial stress.
The Los Angeles County Board of Supervisors has also funded outreach to educate residents about the risks of payday loans and connect those in need with safety net programs and other financial alternatives.
The Senate Banking and Financial Institutions Committee is set to hear the bill June 19.
Solis and Kuehl urged consumers to contact their state senator to let them know they support AB 539. Residents can look up the name and link to contact information for their Senate representative at www.legislature.ca.gov/your_legislator.html.