Senate advances election bill, measure against 'predatory' lending

Pritzker says measure hastily passed by Democrats is 'actually an ethics law'

Capitol News Illinois
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SPRINGFIELD — A bill that would place greater controls on certain types of expensive loans to small businesses was approved by the Illinois Senate on Thursday.

Senate Bill 2234, known as the Small Business Financial Transparency Act, targets a relatively new breed of non-traditional lenders in the credit market: online app-based financial services companies sometimes known as “fintechs.”

Sen. Chris Belt, D-Swansea, the bill's lead sponsor, said it is based on the federal Truth in Lending Act of 1968, which regulates consumer credit. Non-traditional lenders must calculate and express the cost of a loan using a standard annual percentage rate (APR), even if the lender bases the loan on a different fee structure.

“There has never been anything like the Truth in Lending Act on the commercial side,” Belt said on the Senate floor. “So this legislation aims to replicate the Truth in Lending Act on the commercial side. It ensures that small businesses receive consistent and transparent disclosures about the costs of small business financing.”

At a news conference earlier in the day, credit reform advocates said certain fintech firms in recent years have targeted small and minority-owned businesses, particularly in low-income communities, with predatory lending practices that leave borrowers winding up with a lot higher payments in fees and interest rates than they expected.

Horatio Mendez, president and CEO of the Chicago-based Woodstock Institute, said that when he worked in the private finance lending industry, he often asked nonprofit and community-based lenders what a typical small business owner looked for when applying for a loan.

“And in most cases, the response was that these small business owners and entrepreneurs needed help refinancing predatory loans that they didn't realize they had taken out,” he said.

Senate Republicans opposed the bill, arguing its goal was to drive a certain type of new, non-traditional lender out of the market at the expense of larger, more traditional institutions.

“It will shrink the market in Illinois, thereby providing fewer options for the small and medium-sized businesses in our counties that need to borrow money,” said Sen. Jason Plummer, R-Edwardsville. “It pushes a lot of people out of the market and gives certain companies a larger share of the business.”

The bill passed the Senate by a vote of 36 to 19. Next it goes to the House of Representatives for consideration.

Advice questions, voting changes go to Pritzker

Democrats in the state Senate approved a measure Thursday that would put three nonbinding referendum questions before voters on the November ballot and ban establishment parties from fielding candidates if they have not gone through the primary process.

Democrats with a commanding majority in the House of Representatives quickly pushed Senate Bill 2412 through their own chamber the day before. Republicans in both chambers voted “present” for the bill in protest, while a handful of Democrats voted against it or skipped the vote entirely.

Read more: Democrats push through changes to ballot access and consultation issues

Republicans criticized the bill as a deliberate attempt to block the mid-cycle Republican opponent of Democratic Rep. Katie Stuart of Edwardsville, whose 112th House District in the Metro East did not record a Republican nomination in the March primary. Both parties have used the selection process to strategically place a candidate on the ballot if they deem the winner of the other party's primary to be beatable.

The House Republicans' political arm announced last month that Jay Keeven, the former Edwardsville police chief, would challenge Stuart in the November election. On Thursday, the party apparatus referred to the measure as the “Katie Stuart Protection Act” in a statement that said Keeven had collected hundreds of signatures to support his nomination petitions “within just 24 hours” of the law's passage to the State Board of Directors Elections to be filed in the House.

Senate President Don Harmon, D-Oak Park, debates his measure to prevent political parties from nominating candidates for a general election if the party did not have a candidate in the primary. (Capitol News Illinois photo by Peter Hancock)

Senate President Don Harmon, D-Oak Park, said Republicans' concerns about quickly introducing and passing the measure in the middle of the campaign cycle are unfounded. He said the bill would “put an end to a destructive practice,” alluding to the use of slating by former powerful Democratic House Speaker Michael Madigan, who is awaiting trial on federal corruption charges that have nothing to do with elections have to do.

“I want to emphasize that we are not taking this away from Republicans; We’re taking this away from everyone,” Harmon said. “We Democrats will not be able to run candidates for Senate in any district where your members are running unopposed. It’s a problem with practice.”

One of three non-binding advisory questions that would be asked of voters in November under the bill would ask whether they would support civil penalties for any candidate who “interferes or attempts to interfere with the official duties of a poll official,” which the Republican Fueling the state would be Sen. Steve McClure, R-Springfield.

“It is very ironic that a motion containing a referendum on election interference is actually affecting an upcoming election,” he said. “That’s what this bill does.”

When asked at an unrelated event Thursday whether he would sign the bill, Gov. JB Pritzker did not answer specifically, instead calling the measure “actually an ethics bill.”

“It really makes sure that we're not making backroom arrangements to get people on the ballot and running because, you know, a small group of people in a smoke-filled room are making the choice,” he said. “For me, more transparency is better.”

In addition to asking about civil penalties for candidates who violate election laws, voters would also be asked whether health insurance plans that cover pregnancy services should be required to cover in vitro fertilization and whether the state should impose an additional 3 percent income tax should be $1 million “for the purpose of…property tax relief.”

Capitol News Illinois is a nonprofit, nonpartisan news service that reports on state government. It is distributed to hundreds of newspapers, radio and television stations nationwide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation, along with significant contributions from the Illinois Broadcasters Foundation and the Southern Illinois Editorial Association.

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