Supervisors approve 45-day moratorium on new check cashing and
pay day businesses
From the Office of the Treasurer and Tax Collector
January 10, 2006
The San Francisco Board of Supervisors voted unanimously today
in favor of a 45-day urgency moratorium on new check cashing and
pay day lending businesses in the City.
The moratorium, sponsored by Treasurer José Cisneros and
Supervisor Tom Ammiano, seeks to temporarily halt the proliferation
of predatory lending businesses which dominate low-income neighborhoods,
while allowing time for permanent controls to be established.
"I am encouraged by the strong support of the Board for
this important legislation," said Treasurer Cisneros. "These
businesses have been allowed to grow unchecked for too long. They
prey on our low-income citizens and all too often trap them in
a spiraling cycle of debt."
The moratorium becomes effective when signed by Mayor Newsom.
During the 45-day period, no new check cashing and pay day lending
businesses can open in San Francisco, and no existing business
can convert to a check casher or pay day lender.
Within 25 days of becoming effective, the Planning Department
will submit a written report to the Board recommending permanent
controls. These controls could include limiting the proximity
of these businesses to public housing or social service providers,
and capping the density of check cashers and pay day lenders.
"Treasurer Cisneros and I have championed this issue because
we believe the City deserves better. My district, the Mission,
has been overwhelmed with fringe financial service providers.
It's time to start regulating these businesses and making sure
all San Franciscans have access to real banks and credit unions,"
said Supervisor Ammiano.
There are no existing local controls regarding check cashers
and pay day lenders, which are currently regulated as any other
retail sales business. The estimated 56 check-cashing and payday
lending businesses in San Francisco are concentrated in the city's
poorest neighborhoods. They cash payroll, government and personal
checks for a fee that can range between two and ten percent. Payday
lenders also offer short term personal loans, with interest rates
that can approach 1,000 percent for a one-week loan when expressed
as an annual percentage rate.
"By charging exorbitant rates and fees, these institutions
deprive hard working people of the chance to get ahead and build
assets," said Kevin Stein, Associate Director of the California