News & Resources

Local governments crack down on Bay Area short term lenders

Jul 28, 2011 Todd Milner

City governments in the San Francisco Bay Area are clamping down on short-term lending following the passage of a moratorium by the Pacifica City Council that bans the opening of new short term loan stores, according to the San Francisco Examiner. "You've seen a real hotbed of new activism in East Palo Alto, San Mateo and Santa Clara counties along with groups which have been working on short term lending issues for years and years in San Francisco," Paul Leonard, director of the Center for Responsible Lending's California chapter, explained to the news source. Figures from the Silicon Valley Community Foundation indicate that the 37 short term lenders located in San Mateo County are earning more than $9 million per year through interest payments from those who make credit decisions to take out short-term loans - a significant proportion of which are from repeat borrowers. However, short term lender trade group California Financial Service Providers Association maintains the industry doesn't provide the so-called rollover loans, in accordance with state policy. Last month, Assemblyman Charles Calderon - a Whittier Democrat - proposed a state bill that would increase the amount consumers are allowed to borrow from $300 to $500, the San Mateo Daily Journal reports.