From the story in the Denver Post:

The legislation would let Colorado voters decide this year whether to cap at 36 percent annual interest rates, which can now climb higher than 300 percent on the small sums.

Opponents predict a complete shuttering of the payday-lending industry in Colorado should the proposal succeed.

Rate cap bill will be introduced tomorrow:

The bill that Rep. Mark Ferrandino and Sen. Chris Romer are sponsoring would cap payday loan interest rates at 36 percent.”We’re just trying to put them back under the same regulation that every other financial institution has in this state,” said Ferrandino.But the bill was shot down two years ago. Ferrandino said payday lenders argued that a lower interest rate would drive them out of business in Colorado.

Payday lenders told the truth.  A 36% rate cap translates to $1.38 per $100 loaned.

Since the AP used information provided by CFSA:

The average fee for a $100 payday loan is $15.

If you translate that two-week advance into an annualized rate, as on a credit card, you’re looking at a 391 percent interest rate.

By that measure, the payday lending industry says its rates are cheaper than the alternatives available to risky borrowers. Here’s a look at some options borrowers in a pinch might use, and how they stack up against payday loans.

The calculations assume the fees are for $100 in credit or charges for two weeks.

Fee — Loan Type — Annual Percentage Rate

$15 — Payday loan — 391 percent

$29 — Overdraft fee on checking account — 755 percent

$37 — Credit card late fee — 965 percent

$56 — Bounced check fee — 1,449 percent

Had no idea about some of these things:

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The payday lending industry has received editorial support from a Wisconsin newspaper.   We love it.  From the editorial in the Milwaukee Courier:

Where these intentions may seem admirable at first glance, what about the people and not just “poor” people who need a financial option that just takes them to their next check. Why do we need legislators to dictate consumer decisions by eliminating their choices? This is also about consumers having options and choices to make our own decisions. The payday loan procedures are quite clear when the loan is being taken.

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Are people going to be forced to go to street lenders for their emergencies? Because a regulation crackdown that eliminates these businesses will not eliminate the financial need that still exists. Are legislators saying that people who may need some financial assistance are not intelligent enough to make their own financial decisions? These businesses do not prey on people they are simply available, in fact they don’t even need to advertise their product. Instead of eliminating options, legislators should find a way to open up the door for more options. If the banks are threatened by this, then begin offering something better. Businesses don’t last unless there is a demand. Look at the need for the demand, don’t attack the option.

Andrew Breitbart, new media entrepreneur, made such an impact at the CPAC conference in Washington this week, the Washington Post gave him big write up today.   Andrew will be speaking at the CFSA annual meeting during the luncheon session on March 4.

Andrew Breitbart, publisher of prominent conservative news portals, drew enthusiastic applause and cheers from the crowd at the Conservative Political Action Conference on Saturday by attacking the mainstream media and liberal, elitist politics.

He accused the mainstream media of being out of touch with sentiments in real America. Instead of reporting on the problems of the community-organizing group ACORN, Breitbart said, the media investigated conservative activists and ACORN foes James O’Keefe and Hannah Giles, who gained notice by posing as a pimp and prostitute to target ACORN in hidden-camera videos.

Payday lending employees “filled the room.”   From the story:

Payday loan companies say it isn’t fair to look at their fees on an APR basis. Their customers aren’t comparing payday loans with the kinds of loans measured in APR, but with the costs of a bounced check, or the penalty for paying a utility bill late, or the price of overdraft protection.

“All of those things are significantly more expensive than payday loans, and not only that, but they affect your credit,” said Doug Nickerson, chief financial officer for QC Holdings.

His comments found a receptive audience among the 100 or so people at the St. Louis Library’s Carpenter Branch. Most were employees of his company or other payday loan outfits.

“We filled the room tonight because we’re concerned about our jobs,” Tom Linafelt, a QC Holdings spokesman, said later.

This headline from Missouri cracked me up:  Lawmakers purpose restrictions on payday loans.  (my italics)

At least Politico dramatizes it that way.   From the story:

The Senate Banking Committee will face dueling financial reform proposals when the panel finally convenes for formal consideration of the bill.

Committee Chairman Chris Dodd (D-Conn.) plans to unveil a new draft bill next week and has set the first week in March as the target date for committee review.

The panel’s top Republican, Richard Shelby of Alabama, plans to bring his own bill to that meeting.

From today’s BusinessWeek:

The Consumer Financial Protection Agency sought by President Barack Obama is an essential part of the regulatory overhaul being negotiated in Congress, House Financial Services Committee Chairman Barney Frank said.

The standalone agency, opposed by Republicans and banks including JPMorgan Chase & Co., is “very important to us” because existing regulators view consumer protection “as a second thought,” Frank said yesterday in a Bloomberg Television interview.

“The agency that has by far the most power assigned to it to protect consumers is the Federal Reserve, and they don’t do it very well,” said Frank, a Massachusetts Democrat who put the consumer agency in legislation the House approved in December.