Close pawnbroker loophole in Illinois law on predatory lending

For the past 20 years, I’ve had the honor and absolute privilege of representing Chicago’s South Side and the southwest suburbs in the Illinois Senate.

My childhood experiences coming to Chicago during the Great Migration from Mississippi, a state Dr. Martin Luther King Jr. described as “sweltering in the heat of injustice,” gave birth to my thirst for pursuing economic, social and racial justice and equality for all.

As I close out my final week in the state Senate, I can confidently say without question that’s been the cornerstone of my legislative career.

I’ve fought banks, mortgage companies and credit unions to hold them accountable in helping to close the racial wealth gap between Black and white families. I haven’t taken money from corporations; instead, I’ve worked every single day to pass laws that help make life fairer for everyone.

I helped pass the Predatory Loan Prevention Act, which caps the interest rate for consumer loans at 36%, which expands economic opportunity in Illinois by putting an end to predatory consumer loans — including payday loans, auto title loans, pawn loans, and high-interest installment loans that historically target Black and Brown communities.

Prior to this, the average interest rate for a payday loan in Illinois was 297%. Legalized loan sharking sapped billions from lower-income and Black and Brown communities.

But I know there’s still one thing left for me to do.

My colleagues and I need to protect the integrity of our policy changes from the ill intentions of pawnbrokers who are preying on the financially vulnerable, undermining policy that is intended to protect the very people they’re targeting.

After the 36% rate cap took effect last year, pawnbrokers received an injunction in Sangamon County Court allowing them to continue “business as usual,” which, for them, means charging 240% APR or more.

Rather than wait years for the issue to make its way through the judicial system, the Illinois General Assembly can tweak the law now and render the judicial case moot. Allowing pawnbrokers to charge triple-digit interest harms the people I have devoted my life to protecting. It also weakens the very foundation of our policy changes and makes them more vulnerable to attacks by other predatory lenders.

For example, if we permit pawnbrokers to charge 240% APR, how do we justify imposing a 36% rate cap on other types of lenders? They would rightfully argue that the playing field is uneven and unfair.

Many of my colleagues are concerned about the future of the pawnbroker industry if we make them subject to the 36% rate cap. But the pawn industry, which is thousands of years old, exists in all 50 states, including in states with rate caps at or below 36%. In fact, pawnbrokers successfully operated in Illinois under a 36% rate cap from 1901 to 1991.

And what about the future of consumers whose money is being taken by the pawnbrokers? Given a choice between money in consumers’ pockets and profits for pawnbrokers, I side with consumers. After all, I work for the people, not the pawnbrokers. Why should low-income families be expected to fund and sustain predatory lenders?

If we can’t do this, then we’re essentially giving silent permission to continue the systemic racism that led to our transformative policy changes.

Only when we close the pawnbroker loophole will I be able to know that I left it all on the mat for the people I represent.

Although this is my final legislative goal, it does not end our collective pursuit of justice and equality for all, because — despite being decades into the future from the time during my childhood when I could only drink water at the fountain for “colored” girls and boys — the Black community’s fight for justice and equity is still not over.

State Sen. Jacqueline Collins has represented the 16th District since 2003.

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