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12:11 PM / Thursday July 16, 2020

10 Jun 2012

Parker critical of legalized loansharking legislation

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June 10, 2012 Category: Local Posted by:

HARRISBURG–State Rep. Cherelle L. Parker, D-Phila., said the House vote on H.B. 2191 brings Pennsylvania that much closer to legalizing loansharking. The House voted 102 to 90.

 

“As I have said previously, House Bill 2191 opens the flood gates to predatory lenders, rather than keep them out as is claimed by the proposal’s sponsors,” Parker said. “This legislation would allow for some of the highest interest rates in the country. A 369 percent annual interest rate is essentially legalized loansharking.”

 

Sponsors of the bill maintain it protects consumers. Parker said that proponents of the legislation claim they are trying to rein in abusive Internet payday lending.

 

“The truth is, Internet payday lending already is illegal in Pennsylvania,” Parker said.

 

Parker, who chairs the House Philadelphia Delegation, said the loans authorized under H.B. 2191 are not short-term quick financial fixes but instead “create a debt quicksand that traps consumers and pushes them into a worse financial position than when they started. Comparable laws in other states have resulted in trapped consumers in nine payday loans a year. Seventy-six percent of payday loans to repeat borrowers.”

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Parker said one of the companies pushing for enactment of the legislation – Cash America – is the same company that the state Supreme Court prohibited from making illegal Internet payday loans to Pennsylvanians. In its decision, the court explained that Cash America’s business model is to charge astronomical interest rates.

 

“If you combine the interest and the various fees permitted under the bill, it would legalize precisely the same outrageous rates that have long been considered usury under state law,” Parker said.

 

Pennsylvania has long permitted small-dollar loans to carry annual interest rates as high as 24 percent.

 

House Bill 2191 now goes to the Senate for consideration.

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