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Foreign Policy Analysis
Assemblymember Monique Limón: “Consumers Deserve Fair Access to Credit”

Assemblymember Monique Limón: “Consumers Deserve Fair Access to Credit”

– Music – In the mid 18 hundreds California was the
epicenter of the gold rush thousands of people headed west in search of riches. Now California seems to be in the midst of a new type of gold rush that of high cost loans targeting the most vulnerable. They’re targeting people who are left out and marginalized, people who are struggling
to make it every day, there’s much more month then there is money. And these are the people
that they’re targeting, they are putting it in flashing lights come get a loan. Reverend Shane Scott is talking about short term high interest rate loans. The type of loan that
has grown at a record pace in the state 40 fold in the last 8 years and it has grown
because irresponsible lenders have taken advantage of a hole in the law California has no rate
cap for loans between 25 hundred and 10 thousand dollars. In 2018 alone the total was 1.1 billion dollars in
high cost loans most with interest rates as high as 200 or even 300 percent. It is the criminal that these the preditory lending companies like the payday loans that they can
take advantage of working people of poor people. It’s predatory at best and it’s not
just for African Americans but it’s also for Latinos it’s also for poor whites. It is just un ethical to charge someone loans upwards of 200 percent. But there is a light
at the end of the tunnel. The main goal of AB 539 is to establish a rate cap for consumers
in California. Assemblymember Monique Limon chair of the assembly banking and finance committee is leading the effort supported by a broad coalition to add California to the list of
38 other states that already have caps on these types of loans. We have some of the businesses
that offer this product some of the more responsible businesses the office product on board we have military and veteran groups on board, we have labor groups, we have consumer groups who look out for consumers in this state who are all on board. I think really showing that we have an incredible coalition and that coalition is also fueled by our faith based
community in the state who often times are the ones who see the impact that this negative product has on the people that they serve. Responsible lenders say the
criticism that the legislation will cut access to capital to those who need it the most is
unfounded We are supporting the bill because we actually feel that this bill will actually increase access to credit it’s going to provide the stability and the market certainty that’s
going to allow responsible lenders like my company and others to provide more loans that
are safe and affordable to California’s that are in need because of the financial situation
that they’ve found themselves in. The idea that by making loans safer and affordable
will allow consumers to pay them back more easily and increase their credit rating and
give them more options. We want people to have good consumer friendly products we understand
that emergencies happen and we want to support individuals to have options but we want those
options to be responsible. We are balancing the customer’s ability to pay with their financial
need and so we find you know that sweet spot we’re we’re providing loans that are safe
and affordable and people can actually pay back. Here’s an illustration of the severe
impact on consumers a 25 hundred dollar loan with a 200 percent interest rate means after 3 years
you would over 15 thousand dollars that compared to only 4 thousand with the rate cap of 36 percent under AB 539. currently 1 in 3 consumers default on their loans with rates that the California
Supreme Court has declared unconscionable. If they want to help people well don’t charge them these horrible interest rates so that they can never catch up and they get in debt more and more and more. Once you enter into these loans chances are you’ll never get out of them again.

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