April 11, 2008: CALIFORNIA MEASURE WOULD EXTEND TO CONSUMERS “PAYDAY LOAN” PROTECTIONS FOR MILITARY

SACRAMENTO, CA – A bill sponsored by three California legislators aims to give consumers the same protections against “Payday Loans” that were pushed by the Pentagon in 2006 to curb a dramatic rise in the number U.S. soldiers failing security clearances because of debt incurred by payday lending debt cycles.

The measure, AB 2845, jointly authored by Assemblymember Dave Jones (D-Sacramento), Speaker-Elect Karen Bass (D-Los Angeles) and Assemblymember Mike Feuer (D-Los Angeles) would extend current federal law for military personnel to all California consumers.

The 2007 National Defense Authorization Act, signed by President Bush in October of 2006, includes an interest rate cap of 36% for payday loans made to military personnel.

Payday lending, aggressively marketed as a short-term panacea for consumers in a temporary tight spot, has instead been demonstrably shown to trap borrowers and their families in destructive debt cycles.  These loans have an annual percentage rate of over 400%.  A recent report by the California Department of Corporations confirmed that the average payday borrower takes out seven loans per year, with nearly 450,000 borrowers taking out 6 or more back-to-back loans.  Only 4% of borrowers take out only one loan and pay it back at the next payday.

WHAT:  AB 2845, a measure to extend to consumers federal protections for military against predatory payday loans, will be heard in the California Assembly Committee on Banking and Finance.

WHEN:  Monday, April 14, 2008, 2:00 p.m.

WHERE:  California State Capitol, Room 444

California Reinvestment Coalition Executive Director, Alan Fisher, is available for background and comment on the measure.  For more information, contact 415-864-3980.