February 20, 2010 03:49 AM UTC

Payday Lending Reform: It's On

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• by: Colorado Pols

Announcement emails circulated this afternoon from local advocacy groups: Rep. Mark Ferrandino and Sen. Chris Romer will indeed introduce legislation to regulate the excessive interest rates charged by the “payday loan” industry, reportedly capping them at 36% instead of the present 500% or more they are allowed as the result of a decade-old loophole in the state’s usury laws. Here’s the word on the kickoff rally from the Colorado Progressive Coalition:

It is time to close the payday lending loophole.

West Steps of the Capitol

Sunday, February 21 @ 1:00 p.m.

Representative Mark Ferrandino and Senator Chris Romer to introduce a bill to reform payday lending in Colorado

The payday loan trap:

Every time you get paid, the lenders take it away. Debit after debit.

Fee after fee. Until you have no money left and no way to pay your bills.

You do the only thing you can do. Get more loans.

Pay hundreds of dollars more without ever getting ahead.

It’s financial quicksand.

We are going to end the debt trap in 2010!

Come out and help us kick this campaign into high gear!

Folks, this is the most important consumer protection legislation that will be introduced in the Colorado General Assembly this year. The payday lending industry is out of control in the state of Colorado, with more loan shops now than McDonald’s and Starbuck’s Coffee combined. Existing regulations requiring payday lenders to offer repayment plans to addicted borrowers, and limit the number of consecutive loans a customer can receive have been rendered mere formalities. The only people really safe from exploitation by this industry are members of the U.S. military that Congress chose to protect after the situation became untenable around military bases. Why not everybody else? Why not Colorado’s most economically vulnerable citizens, too?

This is a chance for Colorado’s legislative majority to make an immediate and positive impact, and reduce the harm of one of the most predatory, economically exploitative ‘business’ models in our state. A phalanx of lobbyists hired by the payday lending industry awaits this bill’s introduction, too–it’s going to be the biggest battle of this legislative session in terms of hardnosed special interest pressure, and we intend to cover every uncomfortable moment of it.  We intend to name names. As most of you know, this isn’t the first time that payday lending reform has been introduced, but the need for reform in these tough economic times has never been greater. You do not want to be the legislator who comes out of nowhere to kill this bill as has happened before: if we have anything to say about it, there will be consequences this time.

And they shouldn’t have spammed us, we want that in the Community Financial Services Association’s post-defeat analysis.