Last Monday, a bill to significantly slash payday loan rates cleared a House committee but stalled in the full chamber by yesterday as it became clear to the bill’s sponsor, Rep. Mark Ferrandino, D-Denver didn’t have the votes to pass the bill.
House Bill 1351 would cap the interest payday lenders can charge, which currently exceeds 300% a year, to 36% a year. Payday lenders say expressing their loans as an annual percentage is misleading as these loans are only made in increments of only a few weeks.
Supporters and foes of the bill packed into a hearing room at the Capitol to make passionate pleas for or against the measure.
Payday lenders, their employees and the Colorado Financial Services Association say the bill will run a valuable service out of the state. “I think payday loans will cease to exist in this state at 36 percent,” states Lynn DeVault, who represents the CFSA. Opponents of the bill also say that payday loans provide a lifeline to people who need an extra little help to make it to their next paycheck.
The bill’s sponsor says “It isn’t about access to credit, it’s about access to debt.”
Many payday loan borrowers support the measure, saying their payday loan experience caused them to quickly get behind and be in much dire straits than they were when they took out the loan. Lakewood resident Kasie Oliver, who is taking care of three grandchildren, says she quickly realized she couldn’t pay the loan back because of the interest and fees charged.
Rev. Bill Kirton of the Interfaith Alliance of Colorado says this bill is a “moral imperative,” comparing it to Jesus Christ throwing money-changers out of the temple. “Jesus threw these people out because of the morality of the issue, not because he was anti-business,” says Kirton.
The committee stripped parts of the original bill that would have sent the issue to Colorado voters and passed the measure on a 7-4, party line vote. But by yesterday, it was not clear whether enough House members would vote to pass the measure.
Ferradino says the bill will probably sit on the calendar for a few days before the full chamber decides to either hold a vote on it or send it back to the committee for revision.