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Economics in Brief: Ex Mayor Who Advocated for Guaranteed Income to Advise California Governor

Also: Banks request another extension to the PPP; and Illinois may ban payday lending.

In this photo from July 2018, Stockton Mayor Michael Tubbs responds to a question during his appearance before the Sacramento Press Club. Tubbs announced this week that he would be joining the Newsom administration as special advisor for economic opportunity and mobility. (AP Photo/Rich Pedroncelli)

Former Stockton Mayor Who Championed Guaranteed Income Joins Newsom Administration

Michael Tubbs, the former mayor of Stockton, California, whose three-year basic income experiment has been making headlines for how it improved low-income residents’ well-being, will become “special advisor for economic mobility and opportunity” for California Governor Gavin Newsom, the Sacramento Bee reports.

The unpaid position involves serving on Newsom’s Council of Economic Advisors, working with businesses and economic development officials, and potentially working with legislators to advance laws around guaranteed income. Tubbs also told the Bee that he wants to push for other anti-poverty measures that he implemented in Stockton, such as college scholarships. “We should endeavor to end poverty in California,” he said.

Banks Ask Congress to Extend Paycheck Protection Program, Again

President Biden overhauled the Paycheck Protection Program in February to help very small businesses get more money, but some banks said there wasn’t enough time to adapt to the changes before the program expires March 31, the New York Times reports.

The changes were intended to get more money to sole proprietors by tweaking the formula that determines how much money they were eligible to receive; some sole proprietors under the old rules were told they qualified for $1 loans.

But very large banks, such as Bank of America or JPMorgan Chase, straight-up said they wouldn’t comply with the new guidelines: Bank of America stopped accepting new applications from self-employed people on Tuesday, and JP Morgan Chase told the Times it “doesn’t plan” to use the new loan formula before it stops accepting applications.

The result has been what some business owners have called “chaotic” and others a “monstrous failure,” the Times reported, leading many lenders and businesses to call for an extension to the program.

On Thursday, a House committee agreed Thursday to extend the Paycheck Protection Program another 60 days, Inc. reported. The measure could go before the full House next week.

Illinois May Ban Payday Lending

Illinois may join the dozen or so states with strong protections against predatory lending, WTTW reports.

The Illinois Predatory Lending Prevention Act, which awaits Gov. J.B. Pritzker’s signature after passing the state senate 35-9 and the state house unanimously, would cap annual interest rates on short-term loans at 36%.

The average payday loan in Illinois has a 297% interest rate, WTTW said.

The Chicago Reader reported in February that some community development financial institutions (CDFIs) believe that removing predatory lending from Illinois will create more space for responsible lenders. The Reader quoted one CDFI, the Capital Good Fund, a nonprofit that provides small-dollar loans maxing out at 24 percent APR. Its borrowers have average credit scores below 600, and only 5 percent default on their loans, the Reader said.

This article is part of The Bottom Line, a series exploring scalable solutions for problems related to affordability, inclusive economic growth and access to capital. Click here to subscribe to our Bottom Line newsletter.

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Tags: small businesscovid-19banksuniversal basic incomecdfispayday loans

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