CHICAGO – Payday lenders will be prohibited from issuing loans with rates higher than 36% and Illinois government will require certain financial institutions to meet the needs of local communities under major reforms led by State Senator Jacqueline Collins (D-Chicago) and the Illinois Legislative Black Caucus this past week.

Language from two major pieces of legislation by Collins, Senate Bills 1608 and 1792, were included in a comprehensive Black Caucus economic reform measure that passed the Illinois General Assembly Wednesday.

“How many of you want to get a credit card, maybe from Macy's or Neiman Marcus, at 80%, 99%?” Collins asked senators in her remarks prior to the bill’s passage in the Senate. “This is preying on certain communities. It's really a rebirth of redlining, housing covenants and all the other ills that have decimated my community. What we're trying to do is ensure they have an opportunity to build economic stability.”

Collins has advocated for years for stiffer regulations on payday lending, which often traps borrowers in a vicious cycle of taking out loans at exorbitant rates that they are unable to pay. At the same time, Collins succeeded in including major financial reform in the final legislative package, creating an Illinois Community Reinvestment Act that aims to expand access to banking and financial tools to communities that need it the most.

“So many of the ills suffered by the Black community arise from an unequal access to the financial tools and investment opportunities that most white neighborhoods take for granted,” Collins said. “We have seen study after study that concludes banks are simply not lending to or investing in Black communities or Black customers, even after controlling for every other possible demographic difference.”

The new measure requires certain financial institutions to meet the financial services needs of local communities, including low- and moderate-income neighborhoods and areas where there is a lack of access to safe and affordable banking.

“The passage of this legislation marks a turning point in our generations-long fight for equality,” Collins said. “This measure’s success should just be the beginning of a reckoning with how communities of color have been excluded from economic growth in America. I urge Gov. Pritzker to act swiftly to sign this into law.”