Tuesday, December 12, 2017 || By Igor Studenkov/Wednesday Journal || @maywoodnews
State Sen. Kimberly Lightford (4th), whose district includes all or parts of Bellwood, Broadview, Maywood and Melrose Park, has come out strongly against a proposal to increase the fees that currency exchanges charge every time a customer cashes a check.
Lightford spoke out against the proposed fee hikes during a Dec. 6 town hall held in Chicago and hosted by state Rep. La Shawn K. Ford (8th) and the Woodstock Institute, a Chicago-based economic equity advocacy group.
While many community members, elected officials and nonprofit advocates who attended the town hall were divided on whether currency exchanges were good for the community, everybody agreed that the rate hike will hurt people who depend on their services.
On Feb. 10, the Community Currency Exchange Association of Illinois asked the Illinois Department of Financial and Professional Regulation to increase the maximum rate currency exchanges can charge for cashing checks.
For checks worth $100 or less, the fee would go up from 1.4 percent of its value plus $1 to 2.5 percent of the value plus $1.00. For checks worth between $100.01 and $1,250, the rate would go up from 2.25 percent to 2.5 percent. For checks worth more than that, the rate would go up from 2.25 percent to 3 percent.
A fee for cashing a $100 check would go up from $2.40 to $3.50. For a $1,000 check, the fee would go up from $22.50 to $25. And for a $10,000 check, it would go up from $225 to $300.
According to an IDFR report, CCEA argued that the increase was necessary because it was struggling to make a profit in the face of growing expenses. Under state law, the department must ensure that rates aren’t “unreasonable and unconscionable,” while allowing currency exchanges to earn a “reasonable” profit.
On June 19, the department recommended approving the request. In its report, it stated that its own analysis supported CCEA’s arguments. However, IDFR still hasn’t given its final recommendation and that recommendation would need to be reviewed by the Joint Committee on Administrative Rules, a 12-member Illinois General Assembly committee evenly split between Democrats and Republicans, before it takes effect.
Woodstock has been a major opponent of the proposed increase. According to its website, the non-profit develops and advocates for policies that would increase economic opportunities in lower-income residents, especially in communities that haven’t seen much investment.
The organization is proposing to keep the fees for cashing government-issued checks the same and capping the fees for all payroll checks at 2.25 percent. The fees for other types of checks, such as personal checks, would go up the way currency exchanges want.
According to a Crain’s Chicago Business report, Woodstock was responding to the currency exchanges’ argument that fees help offset losses when the checks they cash bounce. Since government checks can’t bounce and checks from employers are less likely to issue bad checks, currency exchanges can afford not to raise fees on those checks in particular.
Ford, who serves as chair of the Financial Institutions Committee, and Lightford, who serves as vice chair of the Senate Financial Institutions Committee, have spoken out against the proposed increase, with Lightford testifying in support of Woodstock’s proposal. State Rep. Camille Lilly (78th) also expressed support.
Lightford described the proposed fee increases as predatory.
“I know the government likes to prey on communities where there’s low income,” she said. “To me, this is another attack on us, and shows that [Governor Bruce Rauner] cares more about businesses than people.
Otis Monroe, founder and head of Monroe Foundation, a non-profit business development organization, said that the issue wouldn’t be as significant if banks were willing to invest in the community.
“[Currency exchanges] want to raise profits because they see uptake in need,” he said.
“We got to engage people,” Lightford said. “We got to empower our people to go into banks.” VFP
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