Apr 7, 2009 2:08 pm US/Central
Durbin Goes To Battle With Payday Loan Shops
Senator Calls Interest Rates 'Nothing Short Of Outrageous'
CHICAGO (CBS) ―
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Dick Durbin, U.S. Senator of Illinois and Senate Majority Whip (File)
AP
U.S. Sen. Richard Durbin (D-Ill.) said Tuesday that some of the interest rates charged by payday loans are "nothing short of outrageous," and he is sponsoring a bill to limit those rates.
Durbin stood at the corner of Franklin and Van Buren streets with a payday loan office as his backdrop.
"I think the situation is totally out of hand," Durbin said. "Whether you're talking about credit card accounts, whether you're talking about these payday loan operations, the interest rates they're charging now are nothing short of outrageous."
Lisa Gonzalez of Chicago says she fell prey to payday loans, and she admits some of the responsibility for not reading the fine print.
"It is as much my responsibility as it is theirs," Gonzalez said. "I do, however, feel that charging 500 percent interest on any loan is ludicrous."
Durbin wants to limit interest rates and fees to 36 percent, the same cap currently in place for the military.
Payday loan offices have been drawing ire for several years. In 1999, Ald. Toni Preckwinkle (4th) drew attention to the industry when she filed a lawsuit against the Illinois Department of Financial and Professional Regulation, challenging state approval of payday loan shops that accepted postdated checks as collateral.
WBBM Newsradio 780's Steve Miller contributed to this report.
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