HomeMy WebLinkAboutReso 135-2015 RESOLUTION NO. 135-2015
CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA
A RESOLUTION REQUESTING THAT THE FEDERAL
CONSUMER FINANCIAL PROTECTION BUREAU (CFPB),
THE UNITED STATES CONGRESS, AND THE CALIFORNIA
STATE LEGISLATURE TAKE ACTION TO PROTECT
CONSUMERS FROM UNFAIR PAYDAY LENDERS.
WHEREAS, according to the Department of Business Oversight and the Center for
Responsible Lending, in the state of California there are over 2,000 of these high-cost payday
lending storefronts, making over $3 billion in triple-digit interest rate loans to Californian
families each year, and draining over $578 million in payday loan fees every year from our
communities; and
WHEREAS, according to the Insight Center for Community Economic Development, the
hundreds of millions of dollars paid in payday loan fees is draining economic resources from our
communities and leading to a net loss of$135 million in economic activity and loss of 1,975 jobs
in the state; and
WHEREAS, despite adopted City Council regulations that control the size, location,
security requirements, and hours of operation for these uses, current state and federal laws still
govern loan terms for consumers which remain high and potentially trap users in a cycle of high-
cost debt; and
WHEREAS, nationwide, the Consumer Financial Protection Bureau (CFPB) found that
during a 12-month period, borrowers took out a median of 10 loans, and more than 80% of loans
were rolled over or renewed within two weeks; and
WHEREAS, the CFPB found that borrowers who take out 11 or more loans each year
account for roughly 75 percent of the fees generated; and
WHEREAS, data from the California Department of Business Oversight indicates that
more than 75% of payday loan fees in CA are paid by borrowers taking out 7 or more loans per
year, and 60%of fees are from those with 10 or more per year; and
WHEREAS, 15 states including the District of Columbia have adopted a 36% or lower
annual percentage rate cap for these small loans and the federal government has adopted a
similar rate cap for payday and auto title loans to the military based on a Department of Defense
finding that these loans, "undermine military readiness, harm the morale of troops and their
families, and add to the cost of fielding an all-volunteer fighting force."; and
WHEREAS, action is needed at the federal and state levels to enforce fair consumer
lending standards in California.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of South San
Francsico supports the Consumer Financial Protection Bureau (CFPB), the United States
Congress and the California State Legislature to consider taking action such as the following,
which have been supported nationwide by groups such as the National Association for the
Advancement of Colored People (NAACP) that will:
1. Require a payday lender to determine the borrower's ability to repay the loan, including
consideration of income and expenses;
2. Not support the issuance of any series of repeat loans or provide any safe harbor of
poorly underwritten loans;
3. Establish an outer limit on length of indebtedness that is at least as short as the Federal
Deposit Insurance Corporation's (FDIC) 2005 guidelines — 90 days in a twelve-month
period;
4. Restrict lenders from requiring a post-dated check or electronic access to a borrower's
checking account as a condition of extending credit; and
5. Limit the annualized percentage interest rates of the loans to 36% or less, consistent with
the limits that Congress has authorized for loans to military personnel.
* * *
I hereby certify that the foregoing Resolution was regularly introduced and adopted by
the City Council of the City of South San Francisco at a special meeting held on the 4th day of
November 2015 by the following vote:
AYES: Councilmembers Karyl Matsumoto, Pradeep Gupta, and Liza Normandy
Vice Mayor Mark N. Addiego and Mayor Richard A. Garbarino
NOES: None
ABSTAIN: None
ABSENT: None
494111L
nelli, City Clerk
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