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November 4, 2013
Editorial: End a Calderon legacy -- usurious payday loans

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(Nov. 4 -- By the Editorial Board)

Legislators of both parties have enabled Sen. Ron Calderon while he has carried water for Indian casinos, for-profit colleges and other big-money interests. Now that Calderon is the subject of an FBI investigation, lawmakers are trying to put some space between themselves and the Calderon family, hoping the public will forget.

They won't. If lawmakers really want to distance themselves from the Calderon legacy, they should take a hard look at reversing some of its most egregious giveaways. One place to start would be the payday-loan industry.

Calderon and his brother, Assemblyman Charles Calderon, are two of the largest recipients of campaign contributions from payday-loan outfits, receiving more than $81,000 from the industry between 2003 and 2011, according to the National Institute on Money in State Politics.

Not surprisingly, the Calderons have been the biggest impediments to effective regulation of this industry, which preys on low-income residents. As of 2011, some 17 states and the U.S. military had effectively banned the practice, because of its potential to trap people into a spiral of debt.

In a recent column, The Bee's Claudia Buck laid out the risks to consumers from payday loans, as outlined by the state's Department of Business Oversight. These include higher interest rates than allowed under California law; funds siphoned from a person's bank account without permission; personal financial data sold and pirated by the lender, and other problems.

According to the Center for Responsible Lending, a consumer group that opposes payday loans, 82 percent of payday loan fees - $474 million - come from borrowers taking out a new loan within two weeks of paying off their last loan. How can a family save to buy a house or send their kids to college if they are trapped in this debt spiral? They can't, thanks to the likes of the Calderons.

Charles Calderon effectively legalized payday lending in California when he served in the Legislature more than a decade ago, with the maximum amount of each loan set at $300. He and Ron Calderon then attempted to push the cap to $500 in 2011. When we called them on it, Ron Calderon wrote a patronizing response that attempted to portray himself as champion of the little guy, even as he was raking in perks and campaign contributions from an industry that doled out $3.28 billion in loans in California that year.

In the most recent session, Sens. Hannah-Beth Jackson and Jim Beall tried to limit payday loans to four per year, with required underwriting and a longer minimum repayment period. Yet the bill got watered down and ultimately defeated when it reached the Senate Banking and Financial Institutions Committee, chaired by - whom else? - Ron Calderon.

Senate President Pro Tem Darrell Steinberg says the FBI sting accusations against Ron Calderon are "serious stuff," which is why Steinberg plans to remove him from the California Film Commission. Yet it's the routine transactional business that the Calderons have performed that has caused the most harm to Californians. Those transactions couldn't have happened if Steinberg and others hadn't let the Calderons rise to positions of power in the Legislature.

If lawmakers want to cleanse themselves of the Calderon taint, cracking down on payday lending would be a good place to start.

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