Urging State Legislators to Rework SB655
Faith leaders, community residents and consumers from across the city of Chicago being led by West Side clergy are opposing proposed state legislation that they say will eliminate access to short-term credit for almost 30% of the community. According to the Faith Coalition for Responsible Communities, several state senators have admitted Senate Bill 655 will cut off credit to a large segment of the population, but continue to move forward on a possible vote on the measure.
“As the economic crisis continues, members of our communities are facing very difficult times,” explains Rev. Dr. Walter B. Johnson, Pastor of Greater Institutional AME Church and a founding member of the Faith Coalition, “Credit is getting harder to access. Mainstream banks continue to ignore our communities and people are getting cut off from credit cards even if they have paid their bills.”
Coalition members are concerned that the proposed legislation will do more harm than good in communities that already are underserved by financial institutions.
“People need access to credit, and a short-term loan can be the difference between fixing your car and losing your job or stopping a utility company from turning off your electricity or gas,” says Karl Bell, a South Side resident. “Overall, no one has the right to eliminate one of the very few credit choices in the community and not have a plan to address the credit needs of the people.”
Proposed with the intent to reform the short-term loan industry, SB655 imposes an annual interest rate cap that falls short of the actual costs incurred by lenders to make short-term loans, Coalition leaders charge. The bill, Johnson adds, will eliminate this credit option for a third of the community.
“We need to preserve the credit choices we have and work to pass real reforms that will protect consumers,” states Rev. Roosevelt Watkins, Pastor of Bethlehem Star Baptist Church and President of the Pastors United for Change. “The Faith Coalition for Responsible Communities has called for real reform to address the problems we hear about most – hidden fees, unfair collection practices, and lack of financial education.”
Unfortunately, loan companies and lawmakers are dismissing these concerns, adds Rev. Watkins. “It is troubling the very industry that is causing many of the problems in our communities are writing new rules for themselves. We need real community involvement in order to preserve our credit and reform the industry.”
In order to achieve real reform, the group says that legislation must target the practices that are causing the real hardship. Real reform should focus on ending unfair collection practices and unethical behavior and making sure public policies protect consumers without eliminating access to credit. The group is also concerned by the lack of community participation in developing the legislation.
“We want to take advantage of the opportunity to truly reform the ways companies operate, but the so-called consumer groups and activists pushing for this legislation are protecting the loan industry while drastically limiting credit in our community,” charges Rev. Calvin Rice, Pastor of Canaan AME Church in Maywood. “We don’t like the idea of people who already have access to credit or other options dictating who in our community will be able to borrow money.”
Members of the faith group have participated in meetings held in Springfield on this issue. However, the talks have focused almost exclusively on interest rate caps. The ministers say imposing such artificial and arbitrary rate caps will result in cutting off access to credit in communities where choices are already limited.
“We intend to remain involved in this important debate and work with elected officials to help our communities recover from the economic crisis, reform unfair practices and ensure fair access to credit services.” Says Rev. Debra Williams, Pastor of Davis Memorial Church.
Also involved in the Coalition are: Pastor Ira Accree of Greater St. John Bible Church and Co-chair of The L.E.A.D.E.R.s Network; Rev. Leon Miller, President of the New Baptist Ministers Fellowship of Chicago & Vicinity; and Pastor George Henderson, President of the West Side Baptist Ministers Conference.