Journal Gazette: Payday of reckoning

HIGH-INTEREST LOANS YET TO BE CAPPED

The good news is that the effort to create new types of high-interest loans that could entrap struggling Hoosier families appears to be dead, at least for the remainder of this session of the legislature. The bad news is that, once again, lawmakers did nothing to eliminate or modify the existing payday system, which allows lenders to charge their customers the equivalent of 391% interest for short-term loans.

Consumer and veterans groups and religious and social organizations had mobilized against Senate Bill 613, which was co-authored by one northeast Indiana legislator, Sen. Andy Zay, R-Huntington, and sponsored in the House by another, Rep. Matt Lehman, R-Berne.

The first sign of trouble came last week, when a number of Republicans joined Democrats to vote down two amendments offered by Lehman. Yet another area legislator, Rep. Martin Carbaugh, R-Fort Wayne, took the floor to urge his colleagues to support one of those amendments. Carbaugh narrowly won reelection against an opponent last year who noted Carbaugh’s co-authorship of an earlier payday-expansion measure that failed in 2018. During the campaign, Carbaugh told The Journal Gazette he didn’t plan to carry such a bill this year.

By the time Lehman pulled the bill without a final House vote Monday, more than 100 organizations had come out against the measure statewide, according to Erin Macey of the Indiana Institute for Working Families. It was, she said, the broadest coalition yet assembled to oppose expanded high-interest lending. Local opponents included United Way of Allen County and Brightpoint.

The coalition against predatory lending began the legislative session with high hopes for a bill which would have capped annualized interest rates for payday-style loans at 36%.

Senate Bill 104 was written by two Republicans and backed by yet another northeast Indiana legislator, Sen. Dennis Kruse,R-Auburn. SB 104 received a committee hearing but was voted down in the Senate the same day SB 613 advanced.

There is little doubt the lenders and their legislative allies will be back with new high-interest loan proposals next year.

But Macey said she believes more legislators are coming to understand what people who work with those at the lower end of the economy already know – high-interest loans can ultimately make things even worse for a working family trying to get by.

Perhaps the most hopeful development is that the high-interest-loans issue no longer divides along partisan lines. “The bill (SB 613) would have passed but for a strong group of Republicans that said no,” Macey said. “There’s opposition on both sides of the aisle.”

The alternative to yet another legislative battle on the same issues next year would be a summer legislative study committee on the issue. Such a committee, United Way CEO David Nicole suggested to The Journal Gazette’s Niki Kelly this week, could “fully gather all the facts and design a system to provide Hoosiers access to credit without being hurt by lending.”