With the Colorado House set to take up Senate Bill 16-185 tomorrow, this year’s bill to allow subprime personal lenders to jack up interest rates on larger loan amounts, the Center for Responsible Lending is out with a poll today of Coloradans’ opinions of the subprime lending industry–and whether they agree these lenders should be able to rake in even more interest on the least qualified borrowers.
No surprise: Coloradans say not just no, but oh hell no:
Raising the cost of these consumer loans is so unpopular with voters that 77% of those surveyed said they would be more likely to vote against a state legislator who voted to increase interest rates. The strongest opposition – 93% – came from voters with household incomes of $30,000 to $50,000 the voters most likely to be affected by a proposal now before the Colorado legislature.
A bill currently before the Colorado legislature would increase the interest rates that lenders could charge on all consumer loans larger than $1,000. Senate Bill 185 would increase the interest rates on most loans by over 2 percentage points. This would result in a 10% increase in the cost of these loans. The bill, pushed by OneMain, a large lender, would cause these rates to rise higher each year. Current borrowers have an average household income of $46,000.
With reference to a prior iteration of the proposal, 89% of those surveyed said they opposed raising interest rates from 28% to 36% on a $3,000 loan. The opposition was similarly strong among Republicans and Democrats and independents. Seventy-five percent of voters “strongly opposed” increasing the rates. Senate Bill 185 woud raise the rates on such loans from 28% to over 30%, and would cause rates to rise automatically over time.
Here’s the details of CRL’s survey. These numbers reveal an industry that, although they are doing a robust business in Colorado, remains deeply unpopular with the public, and garners absolutely no sympathy from their arguments that higher interest is necessary to “remain profitable.” There’s little doubt that the industry is well aware of their dubious reputation with the public, which explains why subprime lender lobbyists have run last-minute bills two years in a row in hope of limiting public awareness of what was happening.
With support somewhere in the Paris Hilton/root canal/Republican Congress abyss, no politician with a sense of self-preservation should be caught anywhere near these loan sharks. We’ll see tomorrow if that lesson is getting through in the Democratic-controlled House, where similar legislation rushed through last year on a 62-2 vote–and left a lot of Democrats making awkward excuses to angry constituents.