The Time Has Now Arrived For Action

Lynda DeLaforgue — Mon, 24 Aug 2009 08:10:27 -0700

"Millions of our citizens do not now have a full measure of opportunity to achieve and to enjoy good health. Millions do not now have protection or security against the economic effects of sickness. And the time has now arrived for action to help them attain that opportunity and to help them get that protection."

These were the words of President Harry Truman when he delivered a message to Congress about the need for national health care on November 19, 1945. Almost sixty-five years later, those words still ring true for too many Americans.

By 1949, the private corporate forces which opposed national health care were offering $3,000 prizes to those political cartoonists who best depicted the evils of “socialized medicine." Sound familiar?

Twenty years later, on July 30, 1965, Truman stood with then-President Lyndon Johnson at the bill signing for Medicare, the first major publicly-administered health care program in the United States. Prior to Medicare, half of our seniors lived in poverty and could not get health insurance. After the creation of the program, poverty decreased by two-thirds as seniors and disabled people enjoyed dependable health insurance.

Today, the same powerful forces want to stop health care reform efforts and, just as in 1949, they are masters at creating a climate of fear and confusion. But ask any senior today if they “fear” being eligible for Medicare benefits and here's the answer you'll most likely hear: “Why should anyone be afraid of Medicare?” The program offers them the peace-of-mind we all deserve: No one will drop them from insurance if they get sick, no one will deny them treatment for a pre-existing condition, and no CEO will bring home a multi-million dollar salary amassed from their premiums.

The current controversy over the proposed public option -- which seeks to expand health care availability and bring down costs -- is nothing new. This struggle has raged in our country for nearly a century. On November 14, 1934, Franklin D. Roosevelt first noted that, “economic loss due to sickness,” results “in problem for many families with and without incomes."

Perhaps during this new round of debate, as Americans are once again getting bombarded with misinformation regarding publicly administered healthcare, we should heed Roosevelt’s most famous words, “We have nothing to fear but fear itself."

Now is not the time to allow the politics of fear to delay history. Now is the time to make history. If you have not yet volunteered or worked for health care reform, do something and do it soon. This is undoubtedly the most historical opportunity for change in our generation. Don’t sit on the sidelines. Be a part of history.

Lynda DeLaforgue is the co-director of Citizen Action/Illinois, the lead Illinois member of the Health Care for America Now (HCAN) coalition. To learn more, visit their website or Facebook page.

The Wild West Of Payday Lending

Lynda DeLaforgue — Wed, 06 May 2009 09:16:32 -0700

In the late 1970’s, as the prime interest rate rose to 21 percent, many states eliminated or relaxed regulation of consumer credit. Some state governments modified their laws so that the rate caps fluctuated with some published market interest rate. Most states raised their caps to around 36 percent, which was a point not binding on traditional lenders. Illinois chose to eliminate rate caps altogether on small loans, setting the stage for our state to become the safe haven for predatory lenders that it is today.

The small loan lending crisis in Illinois, like the national mortgage lending crisis, is the result of a deregulated oversight system, mixed with a lethal dose of greed on the part of the lenders.

In 1999, the Msgr. John Egan Coalition for Payday Loan Reform first took on the small loan industry in Illinois. After a protracted battle, our state finally passed the Payday Loan Reform Act (PLRA) in 2005. PLRA was intended to reign in the most egregious practices of the payday lenders. PLRA works to end the debt cycle by restricting rollovers, limiting how many loans can be taken out simultaneously, and indexing the amount a person can borrow to their gross monthly income.

The work of the Egan Coalition continues in 2009 because lenders of small loans continue to squeeze people. Here’s an example of predatory lending that is still taking place in Illinois.

In November 2006, Mr. Webb took out an installment loan for $250.00. He is 80 years old and lives on $1,300 a month from Social Security. He made five monthly payments which only covered the interest. Then he got to the final payment, where he owed the full principle plus the interest for that month. This is known as a balloon payment and is particularly dangerous for consumers. Mr. Webb couldn’t come up with the $337.50 he needed to pay off the loan. So he was forced to roll it over. He went through this cycle three times. By August of 2008 he had paid almost $2,000 just to borrow $250.

This is usury in Illinois.

Despite the reforms passed in 2005, payday lenders in our state are still making loans over 700% APR and trapping people in long-term debt cycles. They quickly figured out that they could circumvent the definition of a “payday loan” as required by the PLRA law by extending their loan terms over 120 days in length and calling them “installment loans." According to a report issued by national consumer advocates in 2008, Illinois is one of fourteen states which scored straight F’s for protecting consumers from high-interest auto title, payday, and installment loans.

Thus, after a decade of reform efforts and countless proposals before the legislature, Illinois is still the "Wild West of Payday Lending." Could it have anything to do with the fact that according to the National Institute on Money in State Politics, Illinois ranks first in nation for giving by payday lenders to the state legislature? Our state politicians raked in $2.2 million between 2000 and 2006.

A similar report issued in 2008 by the Illinois Campaign for Political Reform (ICPR) showed that the industry's political giving suggests a focus on stalling legislative action, while winning friends among executive branch regulators.

ICPR noted that three out of four sitting senators reported contributions from the payday lending industry since 2005; and four out of five sitting House members reported contributions. They have particularly targeted members of the House and Senate Committees on Financial Institutions.

This legislative session, the Egan Campaign hopes to move a bill (SB 1435) that will regulate small loans under $4,000. Once again our effort has come under fierce opposition by an army of well-paid and politically-juiced lobbyists. However, the Egan Campaign, Attorney General Lisa Madigan, and Governor Pat Quinn have formed a strong coalition to ensure that consumers are protected from the worst practices of high cost loans.

It does not matter if the loan is called a payday loan or installment loan. If it looks like a duck, and quacks likes a duck - it’s a duck. Usury is usury, and it is well beyond time to end it in Illinois.

Lynda DeLaforgue is the co-director of Citizen Action/Illinois, a member of the Msgr. John Egan Coalition for Payday Loan Reform.