DENVER—Senate President Peter Groff said Tuesday he plans to kill his own payday lending bill because he said it now protects the industry rather than consumers.
Originally the measure (House Bill 1310) would have limited payday lenders to 45 percent interest and a one-time fee, and allowed borrowers at least a month to repay their loans. In the Senate, the 30-day minimum period was erased in favor of a 7-day minimum loan period. The amended bill would also allow lenders to charge a loan fee each time a borrower has to rollover their loan because they can’t repay it in addition to the 45 percent rate.
The coalition that backed the bill said that combination of a shorter loan period and charging fees for every rollover would have continued what its members view as predatory lending.
“It’s the rollovers that trap and harm the consumers,” said Spiros Protopsaltis, president of the Center for Policy Entrepreneurship.
Groff also blamed the changes offered by fellow Denver Democrat Sen. Jennifer Veiga for unraveling protections for consumers. He said he would ask the Senate Appropriations Committee to kill the proposal (House Bill 1310) on Wednesday.
Veiga said her amendment was a compromise between existing law, which has no minimum time limit on loans, and Groff’s bill, which she feared could have driven payday lenders out of business. She said a similar law passed in Oregon has forced many lenders to close, leaving fewer options for people who need to borrow money to make it until their next payday.
Groff said Oregon saw some lenders close and consolidate but payday loans are still available there.
“We were trying to protect the hardworking people who need that bridge,” Groff said.
The coalition’s analysis showed the effective annual percentage rate for a two-week, $100 loan, including a $20 fee, would be 566 percent under the amended bill compared with 521 percent currently. Since the fees for subsequent loans were halved to $10 the effective APR for borrowing $200 would be 436 percent under the amended bill compared to 521 percent under current law. Veiga didn’t dispute the figures.
However, Protopsaltis said most people aren’t able to repay their loans within two weeks so they would end up paying more in the additional fees. He said the group would try again to pass a bill next year.
