By Dionte Coleman
INDIANAPOLIS – There is no way the Payday Loans Bill will progress in the form it passed in the Senate, House Financial Institutions Chairman Woody Burton said after a lengthy hearing on the bill controversial law.
But what will happen to Senate Bill 613 is unclear. Burton urged those who support the measure and opponents, who want him dead, to seek a compromise. The result could be a substantially amended bill that still retains some form of payday loan, a bill reduced to a summer study committee on the matter, or no bill at all.
Burton, R-Greenwood, authored Indiana’s first payday loan law 15 years ago. He said he “wanted oversight on these people (the payday lenders) instead of in parking lots. Even though it was interest rate of 350, 400%, but it was for two weeks.
Burton, who opened Tuesday’s committee hearing acknowledging that “I would say this bill is a bit controversial,” later said he wanted to make sure there was a loan product available. ’emergency that is overseen by the government,’ but I’m not interested in donating the store either.
“I’m trying to come up with some kind of fair and just law,” he added. “If we can’t, then it won’t happen.”
SB 613 currently states that payday lenders can offer two loan options to borrowers, each with long-term implications and high Annual Percentage Rates (APRs).
The first option would give borrowers an unsecured installment loan between $ 605 and $ 1,500 for six to 12 months with a maximum APR of 192%. The second option is for small loans, which can provide up to $ 4,000 over four years with a maximum APR of 99%. These allow someone to use their car title as collateral for the loan.
It also changes the definition of criminal loan sharking. Indiana law states that lenders offering loans that bear interest over 72% can be charged with a felony.
Senator Andy Zay, author of SB 613, told the House Financial Institutions Committee that the bill provides choices for people with low credit scores who are targeted by the current payday loan system.
“We have to recognize that this market exists, and the challenge is how are we going to regulate it, how are we going to deal with the bad players in this deal, how are we going to put each of these protections in place,” Zay says. .
Brian Burdick, a lobbyist for lenders including Check Into Cash and Community Choice Financial, said the bill will help grow the subprime loan market.
“The people who oppose this bill I think are doing it with a pure heart and just have a different point of view. I share that I wish people would go and borrow with Chase and Old National (banks), but that’s not the way the world works, ”he said. “So we need a solution. This problem exists and you just can’t wish it.
He and Zay argued that the bill would give Hoosiers options to rebuild their credit so they can go to a bank in the future for loans.
Opponents, however, have argued that there are nonprofit agencies to help those in need, and that payday lenders only deepen the financial hole many find themselves in.
Steven Bramer Jr., a 38-year-old disabled Iraq War veteran from Hammond, who spoke at a press conference earlier this month against SB 613, returned to the Statehouse on Tuesday to urge legislators not to adopt it.
Noting that his five-year-old daughter asked him why he had to come to Indianapolis, Bramer said he hopes that one day she can name her father as someone who prevented this bill from becoming law.
Bramer told the committee he battled drug addiction after returning from Iraq to deal with the pain of his battle scars. After eight years of abstinence, he says, he found new substance in payday loans.
“I’m the Hoosier you think of when you see these loans. I am a middle class dad who has to support his wife and four daughters. I’m the Hoosier who will likely review a loan like this at some point, but I’m here to tell you this bill is bad, ”Bramer said.
Members of the Indiana American Legion, led by retired Brigadier General James Bauerle, also opposed the bill. He cited a 2006 Federal Defense Ministry study that “predatory loans undermine military readiness, damage morale in troops and their families, and increase the cost of deploying an all-volunteer combat force. “.
Bauerle said the Defense Department recommended a 36% cap on loans, including all fees.
“This was passed by Congress as a Military Loan Act to protect serving members of military service and their families. It does not protect veterans, our Indiana National Guard members or our reserves that reside in the state, ”he said.
The commission has a little less than two weeks to see if the compromise requested by Burton can be reached.
Dionte Coleman is a freelance journalist who works for TheStatehouseFile.com, a news website powered by journalism students at Franklin College.