United Way, HAVIN oppose payday loan-making bill in Senate

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The Leader-Times (Pennsylvania; CFED)

By:  Mitch Fryer

September 7, 2012

 

Some area social services agencies are opposing a state bill that would open the door for payday loan-making.  House Bill 2191 removes the state's 24 percent cap on interest charged to borrowers.  This fall the state Senate will consider HB 2191, which seeks to legalize payday lending in Pennsylvania.  Advocates for the legislation say it would protect borrowers by allowing the loans to occur safely by regulating the industry.

 

But officials with the United Way of Westmoreland County and the domestic violence shelter HAVIN (Helping All Victims in Need) in Kittanning say the legislation would be harmful to the people they serve. They want to discourage passage and are asking people to contact their state senators to voice concern.

"(Our program) Helping Families in Need and Creating Paths to Family Financial

Stability is one of United Way of Westmoreland County's advocacy agenda items," said Dana Bauer, vice president of community investments, with the United Way of Westmoreland County. "This piece of state legislation could jeopardize this goal."

"Payday loans are a predatory lending practice from our perspective that rapidly builds debt for the working poor and impedes low income families from gaining financial stability," she said. "It would have such a negative impact on people on fixed incomes."

HAVIN Director Jo Ellen Bowman, who is the Democratic candidate in the 60th Legislative District, supports that position. Her agency serves clients in Westmoreland County and receives funding from the United Way of Westmoreland County.

"This bill would be harmful to the people we serve at HAVIN," said Bowman. "We work with the United Way of Westmoreland County and their efforts to help those struggling regain financial stability will be decimated with this bill. I am grateful they are taking the lead on this advocacy."

Bowman said economic difficulty is a key factor leading to domestic violence.

"When people are struggling financially, living pay to pay, offers like this look great," she said. 'They aren't looking at the long-term consequences, It's 'I'm desperate right now.' Why set them up for failure? Why are they pushing this legislation?"

Pay day lending has been illegal since 1995. Bauer said The Corporation for Enterprise Development ranks Pennsylvania's policy highly as providing the strongest protections for consumers against payday loans.

"Yet, HB 2191 was adopted by the House 102-90 just before the summer recess and has been referred to the Senate," Bauer said. "The bill would severely hamper United Way's work in financial stability."

Bauer said the bill, if passed, would allow payday lenders to operate in the state, charging as much as 369 percent in annual rates to consumers for two-week loans. She said that, for example, a $300 loan would carry interest of $42.50 under the proposal.

"It is estimated that Pennsylvania's current strong protection from payday lenders saves consumers an estimated $234 million in excessive fees each year," she said.

State Rep. Jeff Pyle, R-Ford City, of the 60th District, voted yes for the bill.

"The legislators (from the eastern part of the state) pushed it," said Pyle. "Their argument was that they had people who were so desperately in debt that they couldn't do without payday loans, who couldn't make their day-to-day payments."

"What's best about it (and why he says he voted for it) is that the high interest rates are a deterrent," he said. "It makes borrowing a daunting process. I think it discourages people from payday loans."Name

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This page contains a single entry by CFED published on September 11, 2012 8:48 PM.

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