A cadre of Baton Rouge Democrats in the state House of Representatives has filed legislation designed to combat the predatory lending practices of so-called ‘payday loan’ outfits — companies that offer cash advances to an overwhelmingly poor and working-class customer base and then charges outrageous interest rates, effectively keeping their customers in debt long-term and thereby creating a steady stream of revenue.
The bill, HB 239, would cap the annual interest rate charged by payday lenders at 36 percent. Currently those interest rates can climb as high as 300 percent. Most credit card companies charge no more than 24 percent annually.
Although the bill’s sponsors are currently capital city Dems, the bill’s lead author, Rep. Ted James, says he expects bi-partisan support: “I’m already building a coalition of Republican and Democratic House members to support HB 239,” James says in a press release touting the legislation. “Other southern states — like North Carolina and Georgia — have found ways to protect their residents from the long-term cycles of predatory payday loan practices while still meeting short-term financial needs.”
Co-sponsors of the bill in the House are Reps. Dalton Honoré and Alfred Williams. A companion bill in the Senate is co-sponsored by Sen. Ben Nevers, D-Bogalusa, Robert Adley, R-Benton and Sharon Weston Broome, D-Baton Rouge.
According to figures provided by the House Democratic Caucus via the nonpartisan Louisiana Budget Project, the payday lending industry in Louisiana collected more than $181 million in fees from consumers, draining $46 million from the state economy and costing more than 650 jobs. The legislation, according to the caucus, has the support of several nonprofit and/or faith-based organizations in the state including AARP Louisiana, Together Louisiana, Habitat for Humanity, the Jesuit Social Research Institute at Loyola University, the Louisiana Community Reinvestment Coalition, the Louisiana Budget Project, Louisiana Missionary Baptist State Convention and United Way of Southeast Louisiana.
The legislation, however, will likely face intense opposition from lobbyists for the lenders.
“People from all walks of life can see the damage these loans cause to families and the state,” James adds. “It’s time for Louisiana to join states like Alabama, Arkansas and Georgia in curbing the harmful effects of payday lending on our residents.”