Rocky Mountain News: Payday loan bill languishes due to Veiga amendment

A legislative attempt to place restrictions on the state’s payday lending industry appears dead as the bill languishes in a Senate committee.

House Bill 1310 sought to restrict or eliminate most of the fees and set a maximum interest rate on payday loans. Backers of the bill said it would end payday borrowers’ “cycle of debt.”

The bill ran into trouble from the beginning, with opponents saying payday loans are cheaper than bounced checks or other late fees. The payday loan industry argued the restrictions would effectively put it out of business.

The rally in Denver not only drew lots of people, but lots of media coverage as well.   Here’s just a few of the stories.    Colorado Springs Gazette, Channel 7, and Rocky Mountain News.

Payday lenders, employees and customers are testifying before the Colorado legislature in an effort to keep their livelihood and consumer finance options intact in the face of special interest groups that want to destroy the payday advance industry.  Some of the key points brought out in this Rocky Mountain News item include: 

          “Employees expressed concern about their jobs, while customers testified that the loans got them through tough times.” 

As the nation totters on the edge of a full-blown recession, should state legislatures really be adding to the problems of unemployment and fewer personal finance options?  You may recall a recent Federal Reserve Bank study that outlined the problems working Americans faced following previous payday advance bans, so why in the world would Colorado want to put its people through the same misery, which may well be even worse if the economy does slip into recession?

Then there’s this little chestnut the special interests like to toss around from time to time when people talk about destroying jobs and eliminating consumer choice by banning the payday advance industry:         

          ‘”Innovative businesses” and credit unions “would step into the void,” he (State Sen. Peter Groff) said.’

Right.  Payday Pundit has already exposed how one credit union plan in Pennsylvania forces customers to borrow more than they need to just so the lender can sock consumers with high loan interest fees while paying a veritable pittance in returns.  Meanwhile other bank fees are soaring.   

And by the way, why would a legislature want to create a marketplace “void,” in the first place?  This just doesn’t pass the smell test.

Between adding to unemployment woes, reducing consumer choice and forcing borrowers into higher priced alternatives, it’s no wonder the Rocky Mountain News has editorialized in favor of letting the payday advance industry remain in marketplace.

The Payday Pundit woke up to a nice editorial in the Rocky Mountain News , Payday Loan Overkill, urging the legislature to oppose restrictive legislation that could put the industry out of business in the state.  The money quote:

“As we said in November, for some residents who don’t have access to other forms of credit, or ready access to cash, payday loans can be the least expensive option when money gets tight. Late fees or bad-check charges can exceed the transaction costs of a payday loan. Repeatedly missing bill payments can mean the end of check-writing privileges and further damage credit scores.”