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February 22, 2010 11:49 PM UTC

Spam This, Payday Lenders

  • 34 Comments
  • by: Colorado Pols

We wrote last September that we were sick and tired of getting payday lending spam on our comments threads, so we were openly declaring war on the industry in Colorado.

Now that a bill is being introduced to limit the crippling interest rates that payday lenders charge, it’s time for us to step up our fight as promised.

Here are the state legislators who are supporting payday lenders and are set to oppose legislation that will be introduced today. We’re not telling you to call them or send them emails or letters or anything: this is strictly for your own personal edification. We just thought you’d like to know which state legislators are supporting predatory interest rates in Colorado (note to any of those listed below: Feel free to post below, or send us a note, if you would like to express a different position).

The list below only reflects members of the House, since the Senate won’t see the bill until after the House does.

KNOWN OPPONENTS OF PAYDAY LENDING REFORM

  • All House Republicans except for Rep. Ellen Roberts

  • Rep. Joe Rice

  • Rep. Debbie Benefield

  • Rep. Jim Riesberg

  • Rep. Lois Court

  • Rep. Kathleen Curry

  • Rep. Sue Schafer (updated 4/8/10)
  • LEANING TOWARDS OPPOSING REFORM

  • Rep. Daniel Kagan

  • Rep. Nancy Todd

  • Rep. Jeanne Labuda

  • Rep. Wes McKinley
  • This list reflects the names of those legislators in the House who are currently expected to oppose payday lending reform. In other words, these folks seem to have no problem with stories like these. These legislators also seem to have no problem making politically inexplicable decisions, because there’s no way to positively spin this (or defend yourself from the attacks) when you are running for re-election. “I Heart Payday Lenders” isn’t exactly a good bumper sticker.

    As we said a couple of weeks ago, a referred measure to the voters is just fine politically, and offers practical benefits: it will make the bill harder for opponents to kill by removing the finality from legislators’ votes, thus giving swing legislators–possibly including one or more listed above–an ‘out’ when the high pressure lobbyists darken their door. By the same token it makes a vote against letting the people vote on payday lending much harder to politically justify. Referring payday lending for a statewide vote gives provides an excellent populist consumer-protection issue to campaign on all the way through November, in contrast to the “Dr. Evil Initiatives” Republicans are running away from as fast as they can.

    Comments

    34 thoughts on “Spam This, Payday Lenders

      1. Riesberg and Rice make sense in a roundabout way. The one I don’t get is Lois Court. She is Andrew Romanoff’s successor in HD-6, and I can’t think of any possible reason she would have for opposing this legislation.

        1. Are you saying there aren’t payday lenders in Court’s HD? Because I figured they were pretty much found in any major city or heavily populated area.

          I like Riesberg. He’s on of my favorites. And I’m calling his office to encourage him to back the reform.  

          1. That was one of the few times where my subject line wasn’t really related the comment body.

            Court is in HD-6, which is supposed to be one of the most liberal districts in the most liberal city. Riesberg and Rice at least have the excuse of being in red districts.

            I guess I’m starting to see that resistance to this reform isn’t really a liberal vs. conservative thing.

            1. How on earth is this a blue/red issue? After the last couple years, I would bet “reining in unscrupulous lenders” would be a phrase that cuts across party lines. The only reason Republicans are universally opposing this is because they’re blocking every initiative Democrats propose for purely partisan reasons. There is no justification for Rice or Riesberg, much less Court.  

              1. What I was getting at was that the Republicans won’t let their strategy of voting against every Democratic proposal get in the way of using stuff like this against the Dems.

                Reps. Riesberg and Rice are both running for re-election in districts that have more Republicans than Democrats, and I wouldn’t be surprised if they were looking for political cover from those kinds of attacks.

                I wasn’t trying to excuse it, I was just saying that I expect that kind of thinking from them, so it was my explanation for their opposition. Lois Court’s stance just confused me.

                1. What? The good people of Littleton just can’t get by without their neighborhood loan shark?

                  Other states have regulated the industry- they didn’t go away.  

                  1. But when Wadhams sends out mailers in Rice’s district that say “Rice voted against small business owners and drove jobs out of Littleton” people aren’t going to say “Oh, I bet this is talking about payday loan places.”

        2. I just called his office and his staffer who was really helpful said he had not had a chance to read over the proposed legislation yet and that’s why he hadn’t come out publicly with a position. I left her my number and am hoping to hear that after he studies the issue, he supports the reform. Riesberg has been a fantastic representative for his district and for those of us in HD49 that are stuck with Lundberg’s mini-me. Perhaps the reason the other names on this list including Court haven’t come out publicly for the reform is because they aren’t up on this issue and how damaging payday lenders are.

    1. For keeping this issue on the front burner. I’m certainly going to watch where my Rep. and Sen. are on the issue and let them know.

      Obviously this is an issue the payday lenders would like as little light on as possible.

      1. First let us analyze who cashes checks at these places and what type of checks?  Its anybody who doesn’t have a real banking relationship (for whatever reason), right?  

        My question here pertains to this: these users are the types of people that likely use the payday function.  The other market of users are those who need just a bit of micro finance to bridge the gap of credit damaging NSF charges from their checking account or some other short-term need.  You’re still with me, right?

        Many will argue that the real target market for payday loans are a bunch of white trash welfare mothers and meth dealing illegal alien fathers.  

        Now don’t get me wrong, earning profits from this market segment or the gal that doesn’t want the NSF charge and resulting credit score hit is commendable.  These businesses serve a purpose.

        My guess is if you Democrats shutter these businesses (payday lenders), then maybe – just maybe another tool of support for residents of Sanctuary City will force them depart for the warmer confines of Santa Fe or Phoenix.  

        Further, you’ll also develop a local street-level black market for micro finance.  Maybe the Pot Dispenseries can fill a new nitch here too.

        The upside on this last tidbit of market impact is you’ll drive out the illegal alien crowd.  

        Unfortuanately, you’ll also hurt the gal wanting to avoid a NSF charges and hurt her credit score.  

        But as an upside, you’ll create a jobs incentive bill by restarting organized street-level crime through enforced lending.

        Whichever way you go, good luck.

        1. is to drive payday lending completely out of business.

          Get real. Payday lending exists in states that didn’t forget to regulate the industry the way Colorado did. There might not be one on every corner in some neighborhoods, and the industry might not have enough spare cash to buy the entire Republican caucus (and a few Democrats), but the need won’t go away and neither will the industry.

        2. I agree that the NSF fees from banks can really pile on and dig you into a deep hole. And in those situations you still need to be able to pay your mortgage. But the payday lending industry doesn’t solve that problem. Instead they dig you into an even deeper hole. That’s because they charge a huge amount of interest (which they are not at all shy about) and when your payment is due (on your next payday), if you can’t pay the loan in full, they make you take out another loan. So you are paying off debt with even more debt. But the second loan of course is bigger than the first to cover the high interest. And this cycle keeps repeating itself.

          The payday lenders argue that NSF fees have an APR higher than their interest rates. But they must be assuming you’ve never taken a finance course because there is no APR on a one-time flat fee.

          We badly need payday lender regulation and badly need NSF fee regulation. The good news is that the Feds seem to be making progress on the latter. It’s up to us to implement the former.

          More importantly, we need to get away from the practice of financing everything. Our reliance upon debt is sinking this country. Credit cards companies need to be much more strict on who they give credit to. Will this hurt the economy, yes, in the short term. But it is a false economy when it is built on imaginary money.  

          1. Example

            Which is a cheaper loan (lower APR)

            A) I borrow $120 for a year, for which I am charged $12 as a fee upfront. I payback the $120 in one year.

            or

            B) I borrow $120 for a year and make twelve monthly payments of $11.

            Either way it costs me $12 per yearand my APR is the same.

            Obviously, with NSF and PDL’s the math is different because the loan periods are so short. If I borrow $120 for one month – and am charged a $12 fee, that’s 120% annual.

            And if I borrow $120 for a week for the same $12, 520% annual.

            1. The difference is about whether you can pay back that loan. When you overdraw on your bank account you get charged a fee. So you have to repay the fee and the amount you went over in order to get your account back to zero. It doesn’t matter how long it takes you to repay that, the amount stays the same (except for possible collection fees if you take too long). In other words there is NO recurring interest charge on your debt to your bank.

              Compare that with a payday loan where you are actually borrowing money. You have a defined period of time to repay it and if you don’t, you get charged a huge interest rate. And that charge keeps recurring the longer you go without paying. Additionally, unlike most loans that charge interest on a per month basis, payday loans typically charge you the interest rate every two weeks. If you are a month over due you likely will owe twice the amount you borrowed.

              These companies are preying on individuals who are in a very vulnerable financial position and are really not in any position to be borrowing more money. I’m sure these lenders can come up with stories about how their service has saved homes and so on. But, there are exponentially more stories about how they have only made people’s situation worse.

               

      1. Its a jobs bill, Chicago-style.

        Dude, take the jobs credit and run to the next bill that mandates banks do micro finance at LIBOR+2.  

        Better yet set up a NGO, backed by the State’s (our) General Fund, to do the microfiance.  Exclude all lending from the TABOR cap, then cry to the public that the revenue sky is falling.

    2. I was at the HD3 meeting on Saturday and Daniel Kagan mentioned there was an amendment coming that addressed his strongest concern with the bill.

      I haven’t been following the issue so I am not up on the nuts and bolts, but maybe this amendment will sweeten it for others as well.

        1. As I said, I have not been paying much attention to the issue and Kagan made the rather non-specific comments in answer to a question from the audience.

    3. WTF is going on here? If something like this should not be regulated, then nothing should. But instead we have legislators “concerned” about auto dealers but figuring the poor can continue to pay usury.

      Note to the GOP – usury is called out as wrong in the Bible. It’s considered wrong by virtually every religion and society. And outlawing this is a chance to do the right thing for the poor without having to spend a penny in the state budget.

      If you’re “uncomfortable” with something in the bill – propose an amendment. But don’t bend over for payday lender’s contributions.

      1. Let’s take you at your word: You therefore support child pornography, child prostitution, indentured servitude, human trafficking, drug trafficking, and, perhaps best of all, the services of professional hitmen. Period.

        1. let’s be a tad more nuanced about it: should the gov protect chilluns but stay out of private contracts between two fully-informed and consenting adults?  If the borrower knows exactly what he/she is signing up for, even if it’s a 500% interest rate, is it the gov’s job to say no?  

          1. and one which should be addressed honestly and precisely. My point was that ideological sledge-hammers like the one I was responding to aren’t the way to address such issues. Once we establish that we don’t believe in complete freedom of contract, the question becomes where to draw the line, rather than whether to draw the line. It’s always important to decisively debunk the notion that there is no line to be drawn.

            So, we clearly want to draw the line in such a way as to protect children from contractual relationships harmful to them that they might enter into. Why? Because we recognize that they are particularly vulnerable, due to certain weaknesses inherent to childhood (involving cognitive and emotional development). But then wouldn’t we want to draw the line in such a way so as to protect other similarly vulnerable categories of people, such as the mentally disabled?

            If “particular vulnerability to being exploited by unregulated rights to enter into contracts” is how we define where to draw the line (since, clearly, there is at least one such instance, based on that reasoning, where we are seemingly in agreement that freedom of contract should not be the rule), then the question before us is a difficult one. Exorbitant interest rates for payday lending is a contractual arrangement exploiting the particular vulnerability of economic marginality.

            Yes, reasonable people can debate whether that is where to draw the line or not. But I don’t think that reasonable people can claim that their particular answer to that question is the one true and inevitable one.

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