Payday lenders couldn’t get a Pennsylvania Senate committee to move a bill that would let them prey on the working poor with annual loan rates of up to 369 percent. But the wolves haven’t stopped circling.
The Senate returns to session on Oct. 15. Philadelphia’s three senators on the Banking and Insurance Committee — Michael Stack, Lawrence Farnese, and Anthony Williams — must resist pressure to push low-income families into a debt trap.
Pennsylvania has a tough anti-predatory lending law, which caps the annual percentage rate for loans at 24 percent. The Department of Banking and Securities has gone after out-of-state lenders that charge high rates. And the state Supreme Court upheld a ban on Internet loans in 2010. But none of that has discouraged payday lenders from such a rich hunting ground.
Borrowers typically take out a small loan, thinking they’ll be able to pay it back on their next payday. But when payback time comes, they realize they don’t have enough money and take out another loan. That starts a months-long cycle that pushes borrowers further and further into debt. They secure new loans with a bank account or prewritten credit-card check allowing the lender to dip into his funds.