Morrissey Makes Case for Payday Lending Reform
By Christinia Crippes
Waterloo Cedar Falls Courier
Waterloo City Council member Pat Morrissey is fighting against payday lending on multiple fronts.
He has offered city ordinance options at the local level. met with Democratic lawmakers at the state level, and last week, he took the cause to Washington, D.C.
Morrissey made the trip with Iowa Citizens for Community Improvement last week to meet with Richard Cordray, director of the Consumer Financial Protection Bureau, and Sarah Bloom-Raskin, one of seven Federal Reserve Board governors.
He and Iowa CCI’s Matthew Covington were two of eight people who were part of the delegation to meet with the federal officials.
“It has economic overtones; it has social justice overtones; it has protections for the vulnerable written into it,” Morrissey said. “This is a people-oriented issue.”
The Iowa Attorney General’s Office describes payday loans as consumers paying “astronomical interest rates on small sums of money, often dragging them into a cycle of debt.”
The funds are often an advance for dollars the consumer anticipates receiving, like a paycheck, but the interest rate can be 300 to 400 percent.
Both Morrissey and Covington came away from their meetings with some optimism about tougher regulations on those types of loans.
More than anything, though, Covington said CCI’s efforts are about an education campaign.
He said the Iowa organization has been working on the issue at the state level since about 2009. The D.C. trip was a part of the group’s ties to the National People’s Action organization.
Since Covington notes that “the proof will be in the pudding,” when it comes to federal regulation, CCI and Morrissey are also working on other fronts.
Covington said cities have been passing ordinances that restrict where payday lending store fronts can set up shop. Morrissey said he has given copies of some of those ordinances to Mayor Buck Clark and hopes that Waterloo can follow their lead.
“Where do you see predatory lenders setting up? You don’t see them setting up in rich neighborhoods,” Morrissey said. “You’ll see them setting up next to pawn shops, liquor stores, bars, and what that ends up doing is it detracts from that neighborhood that much more.”
Covington said at the state level a bill has been introduced just about every year since 2007, when a cap on car title lending legislation passed, but it has not yet made it to the governor’s desk for his signature. Covington said the issue has at times gotten bipartisan support but also bipartisan opposition.
Though many lawmakers suggest this election year will not be one full of legislative action, Covington said there is some interest in at least introducing the payday loan legislation again in 2014.
Covington said CCI and the National People’s Action organizations have pressured the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency to take action.