On Monday we blogged about AB 377 (Mendoza), which may allow Californians to publish a individual check

On Monday we blogged about AB 377 (Mendoza), which may allow Californians to publish a individual check

for as much as $500 to secure a pay day loan, up notably from the present optimum of $300. A borrower who writes a $500 check to a payday lender would get a $425 loan – which must be repaid in full in just two weeks or so – and pay a $75 fee under this proposed change. That’s a serious payday for payday loan providers. But significantly more than that, a more substantial loan size may likely raise the amount of Californians who become perform payday-loan borrowers – paying down one loan after which instantly taking right out another (and another) simply because they lack enough earnings to both repay their loan that is initial and their fundamental cost of living for the following fourteen days.

The Senate Banking, Finance and Insurance Committee heard the bill on and things did not go well for the bill’s opponents, who included the Center for Responsible Lending and Consumers Union wednesday. The committee passed the balance for a bipartisan 7-1 vote. The committee decided that allowing payday lenders to make much larger loans is sound public policy despite overwhelming evidence that payday loans trap many borrowers in long and expensive cycles of debt. One Democrat asked rhetorically: “Is the industry ideal? No. Does it give a very important credit choice for Californians? Continue reading “On Monday we blogged about AB 377 (Mendoza), which may allow Californians to publish a individual check”