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Illinois Town Considers Legality of Capping Payday Loan Rates


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By: Javi Calderon

Illinois Town Considers Legality of Capping Payday LoanRates

Recently, the State of Illinois passed a 36% interest rate cap for consumer installment loans, or payday loans, of more than $4000. This move wasn’t enough, however, for some citizens and faith-based organizations in the town of Bloomington who chose to storm a City Council meeting to push for further action.

City Mayor Steve Stockton pleaded with his constituents, arguing that the issue wasn’t if something should bedone, but rather if the City Council had the legal authority to do so.

Several council members expressed interest in pursuing further regulation of payday loans, and intended on beginning the processes of drafting potential legislation. They even went as far as to ask the opinion of the City Attorney, who originally concluded that city of Bloomington did, in fact, have the authority to regulate interest ratesunder its home-rule status.

When it seemed like a foregone conclusion that the squeaky wheel was going to get the grease, a decision by the Illinois Supreme Court on a different matter quickly reversed the fate of Bloomington’s plan to cap pay day loan interest rates within the city.

On a Chicago ordinance that regarded the resale of tickets for entertainment and sporting event over the Internet, the Supreme Court ruled that when state laws are present, the issue abides by the State regulations. Therefore, since statewide interest rates on short-term loans have already been set, the Bloomington City Council might not have the authority to amend them. 

City Attorney Todd Greenburg now does not expect the City Council to take up any measure to alter interest ratesfor payday loans.

In an opinion on October 6th,the Supreme Court gave two examples of when state laws would trump a home-rule ordinance. One of the examples articulated that a home-rule ordinance to curb interest rates on mortgage loans would be inferior to the federal and state laws already in place.

The City Council could always pass the ordinance and fight it out in the courts, but it seems like the Supreme Court may have already drawn the line in the sand. 


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