- Associated Press - Tuesday, April 8, 2014

BATON ROUGE, La. (AP) - Lawmakers in the House opted for mild changes to the payday loan industry Tuesday by passing a bill to give borrowers an extended payment plan option and rejecting proposals to limit the number of payday lenders and the annual interest rate lenders can charge.

A House committee killed a proposal by Rep. Regina Barrow, D-Baton Rouge, to keep Louisiana from licensing new payday lenders, with opponents saying they do not want to limit the free market.

“I just don’t think it’s a good idea to set a precedent like this,” said Rep. Gene Reynolds, D-Minden.

Barrow said the bill would address the high concentration of storefront lenders in working class communities, which she said make it harder for residents living paycheck to paycheck.

She said her district has about 10 payday lenders in a one-mile area. She also said payday lenders in Louisiana outnumber McDonalds four-to-one.

“We have more than enough,” Barrow said.

Troy McCullen, of Louisiana Cash Advance, said comparing a whole industry to one restaurant chain is unfair. McCullen and Larry Murray, of Blake Enterprises, testified against Barrow’s bill on behalf of the payday loan industry.

Supporters of tougher restrictions argue the short-term loans trap people into debt by charging high fees. But payday lenders have argued more regulations for storefront lenders will kill the industry.

Later in the day after the House committee vote, the full House rejected a proposal to cap the fees that could be charged by the lenders. The proposal would have amended a bill by Rep. Erich Ponti, R-Baton Rouge, chairman of the Commerce Committee.

Ponti’s measure would give borrowers a chance to pay back loans with installments and require online and by-phone payday loan businesses to register with the Louisiana Office of Financial Institutions.

The amendment proposal came from Rep. Ted James, D-Baton Rouge, and called for a 72 percent annual interest rate cap to be added.

James sponsored a bill for a 36 percent cap, but that got rejected a day earlier in committee after opponents said the limit would cause payday lenders to close shop.

James called the 72 percent cap a compromise, but Ponti objected to the amendment saying it was just as harsh as James’ earlier bill.

James also unsuccessfully sought to amend Ponti’s bill by adding language that would let borrowers know the loans’ high interest fees and that they are not a long-term financial solution.

“I believe there should be some responsibility placed on the industry,” James explained.

Ponti objected saying the language is unnecessary since lenders already provide information about fees.

The full House refused both amendments, then passed Pont’s bill with a 91-5 vote. It will next move to the Senate for consideration.



HB 685 and 766 can be found at www.legis.la.gov



Click to Read More

Click to Hide