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Hakeem Jeffries Signs
June 7th, 2011
On two bills clearing way for ‘Payday’ Loans
In a surprising move, Hakeem Jeffries, Prospect Heights Democrat, agrees to support legislation that would condone what city consumer advocates call “predatory” lending practices.
Hakeem Jeffries
Jeffries is the Assemblyman in New York’s 57th Assembly District. Before being elected in 2006, he was an active participant in community affairs within this Assembly District and had made two previous attempts at winning the district.
The Payday Loan
The “payday” loan could be on its way to check-cashing businesses across Brooklyn, if a cross-section of state elected officials, including Jeffries, has its way. Two identical bills introduced in the state Senate and Assembly earlier this year seek to lift the existing 25 percent interest cap on loans issued by financial institutions across the state. According to city consumer advocates, the legislation would clear the way for payday loans carrying interest as high as 400 percent at cash-checking outlets that cater to low-income residents throughout the borough.
Desperate consumers
Jonathan Mintz, commissioner of the city Department of Consumer Affairs said, “The last thing desperate consumers need is high interest predatory loans from check cashers.” Mintz said he understood the need for loans was great in low-income neighborhoods historically underserved by the banking and credit union industries. However, he stressed that the practice of payday lending, in which workers request an advance on their next paycheck at typically high levels of interest, was not the way to go.
Access to short term loans
“Working class people need access to credit and short term loans,” said Jennifer Sinton, deputy director of South Brooklyn Legal Service’s foreclosure prevention project. “The thing is … there are programs by credit unions that do involve responsible lending. Some of the same communities who were worst affected by the foreclosure crisis are now the target of the payday loans,” she said. According to Mintz, despite looming budget cuts on a wide-range of city services, Mayor Michael Bloomberg remains committed to putting more resources into the city’s Financial Empowerment Centers that provide counseling and assistance to residents struggling to stay ahead of their bills.
The bill
Sponsored by Bronx Democratic Assemblyman Carl Heastie, the bill is currently under consideration by the chamber’s Committee on Banks. Mintz said he planned to lobby against the bill on behalf of the city in a visit to the State Capitol on Monday.
A veteran of the fallout left behind by the subprime mortgage crisis, Sinton said she saw parallels between the predatory lending practices prevalent during the housing boom and the payday loan industry.
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