Target: Martin J. Gruenberg, Chair, FDIC
Goal: Cap interest rates on payday loans
A new ploy in the financial market has been growing in popularity. Payday loan facilities are set up to advance the borrower short term loans on ridiculously high interest rates. This loan process becomes cyclical as the borrower ends up needing to take out another loan after becoming financially strapped while trying to pay the exorbitant interest rates of the original loan. Now is the time to act to get this destructive lending under control, before it damages more American lives.
Payday loan facilities are set up to provide short term, unsecured loans to individuals able to provide proof and history of employment. The annual percentage rate of these short term loans, if not paid back within a set time frame, can range from 300%-1,900%. The people taking out these loans are often living paycheck to paycheck. For instance, the Illinois Department of Financial and Professional Regulation found that a majority of Illinois payday borrowers earn less than $30,000 per year. The lending scenario of these businesses has gotten so out of control that thirteen states have banned them and the military convinced Congress to prohibit the charging of more than 36% to military borrowers.
It is estimated that approximately ten million households have had to access the payday loan system last year. There are now more payday loan shops than either McDonald’s or Starbucks. This system is predatory, targeting households that are struggling while trapping them in a cycle of fiscal dependence in an effort to maintain their cartel level profits. The excessive interest rates charged are disgraceful and a threat to the stability of American families. Show support for setting caps on these interest rates by signing below.
Dear Mr. Gruenberg,
The payday loan system in this country has grown out of control. There are now more payday loan facilities than McDonald’s and the annual percentage rate can range from 300%-1,900%. Considering these are financially distressed borrowers, these rates are egregious. While thirteen states have outlawed payday loans, the time for federal regulation on these interest rates is overdue.
You must cap and actively regulate these payday loan facilities. These are rapacious lending schemes aimed at keeping borrowers in a never-ending cycle of debt. Living paycheck to paycheck, many American families simply cannot keep up with these exorbitant rates. You must act now to get this system under control.
[Your Name Here]
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