A job killer bill that will significantly restrict Californians’ ability to access home and auto loans by placing onerous burdens on lenders, which will further exacerbate the housing crisis, will be considered by the Assembly Banking and Finance committee today.
AB 2501 (Limón; D-Santa Barbara) was added to the California Chamber of Commerce Job Killer list today. The bill requires lenders to maintain home and auto loans for an extended length of time with no payments from borrowers. This strain imposed on financial institutions will limit the availability of credit in the future, which will harm our economic recovery.
Specifically, the bill requires financial institutions and financial service businesses to essentially carry mortgage and car payments for at least 180 days after the COVID-19 state of emergency ends, which could be years. For example, the emergencies declared on November 8, 2018 and October 27, 2019 due to wildfires and extreme weather conditions in Ventura County and other counties remain in effect today, long after the fire season has ended. On December 23, 2019, Governor Gavin Newsom terminated more than 70 ongoing states of emergency that had been declared at various times over the last decade, from January 27, 2011 to November 30, 2018. It is very likely that the state of emergency for COVID-19 will persist long after the shelter-in-place orders are lifted and businesses resume operation. However, even when the 180 days expires, AB 2501 still limits the ability for these institutions to recover any loss payments from the consumer.
Requiring these institutions to potentially go years without receiving payment is a significant burden that will negatively impact financial opportunities for Californians. Given the financial risk this proposal creates for such institutions, there is no question that the institutions will limit the mortgage and auto loans it offers. There will likely be stricter criteria to qualify, or, higher rates to offset the potential loss these institutions could suffer under AB 2501. This limitation will have a negative impact on the housing market, further exacerbating the housing crisis and creating job loss in the housing industry. It will also unquestionably limit car loans, especially for those with problematic credit history, and will harm both consumers and workers in the auto industry.
Job Killer Update
SB 893 (Caballero; D-Salinas) has stalled after failing to secure enough votes to pass the Senate Labor, Public Employment and Retirement committee on May 14. The bill was granted reconsideration.
SB 893 would significantly increase workers’ compensation costs for public and private hospitals by presuming that certain diseases (including COVID-19) and injuries are caused by the workplace and establishes an extremely concerning precedent for expanding presumptions into the private sector.
Due to May 11 amendments, the CalChamber has removed its opposition to AB 2992 (Weber; D-San Diego) and it is no longer a job killer.
Staff Contacts: Jennifer Barrera, Valerie Nera