Support Payday Lending Rate Caps

Resolution Number 10-11.10

WHEREAS, California’s hard-working families pay almost $400 million in predatory interest rate fees annually to payday lenders, with the loans carrying up to a 459% annual percentage rate, causing the typical borrower to pay $800 for a $300 loan (Center for Responsible Lending); and

WHEREAS, the high costs of payday loans coupled with short repayment periods create a debt trap for most payday loan consumers, with the average borrower taking out nearly one loan per month, generating an inescapable debt spiral (California Department of Corporations), as well as almost doubling the likelihood that the borrower will be forced into bankruptcy (Vanderbilt Law School), and these effects fall disproportionally on low-income communities and communities of color, draining them of much-needed funds (Center for American Progress); and

WHEREAS, the federal Military Lending Act of 2006 caps the APR of loans offered to service members at 36%, a law which, according to the Department of Defense, increased affordable loan options to the military and reduced the need for military debt relief societies’ assistance;

THEREFORE BE IT RESOLVED, that the California Democratic Party supports imposing a national cap on payday loans not to exceed ten (10) percent; and

BE IT FURTHER RESOLVED, that a copy of this resolution be sent to all members of the California congressional delegation.

Submitted by the Santa Clara County Democratic Party

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Adopted by the California Democratic Party\xe2\x80\xa8
At its Executive Board Meeting\xe2\x80\xa8\xe2\x80\xa8
Radisson Hotel, Sacramento
November 21, 2010

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