Thursday, March 1, 2012

Two Meck Dems Support Bad Consumer Loan Bill

Last June, the N.C. House of Representatives passed a consumer loan bill that in some cases would more than double the interest rates on small loans.  The bill again came to light recently when Democracy Now published campaign contributions made by small loan business owners to House Speaker Tom Tillis and others.

In learning about this issue, I discovered that two Democratic Mecklenburg County representatives had not only voted for the bill but also had co-sponsored it.  I wrote them about their support of this discriminatory legislation.  Here's my letter:

Dear Representatives Beverly Earle and Kelly Alexander: I’ve just learned about a bill to increase the interest rates on consumer loans that was passed by the N.C. House of Representatives on June 2, 2011. Thankfully, it has yet to pass the Senate, but that may happen during the upcoming short session of the General Assembly. The bill is a travesty and in my opinion hurts the working poor in this state. I am not surprised that Speaker Tillis and his right-wing cohorts got it passed (look at the major donations from the consumer loan industry to him and others). I am, however, shocked that you both co-sponsored this legislation and voted for it. As a volunteer for four years at Crisis Assistance Ministry, I interviewed individuals and families who struggled to make a living. They had jobs but a sick child, a car problem or other mishaps created a crisis for them. I’m sure you are familiar with these situations. The people do not need to get trapped into these kinds of loans at the ludicrous interest rates. I read where this bill had some safeguards. An example was the borrower could not take out a second loan unless she had paid off half of the first loan. That’s called a ‘safeguard’? Here are some provisions that are really absurd.

  • Allow 36 percent interest rates on unsecured consumer loans up to $1,500. Now they’re only allowed on loans up to $600. 
  • Increase the maximum size of unsecured loans from $10,000 to $15,000.

  • Allow lenders to charge higher interest rates on a larger portion of those loan balances. They could charge a 30 percent interest rate on the first $5,000, 24 percent between $5,000 and $10,000 and 18 percent above that.
 The 30 percent interest rate had applied only to the first $1,000. The rate for the rest of the balance was 18 percent. I urge you to reconsider your position on this legislation. Yes, I know you cannot change your vote (or maybe you can?), but at least come out and make a public statement that you now believe the legislation is harmful to our fellow citizens including, I imagine, some of whom you represent.
I'll share any response I receive.