As a bill to slash interest rates on payday loans nears a final test in the legislature, drama behind the scenes is building too.
The Senate is scheduled to take up House Bill 1351 today, and the measure, which narrowly passed the House after a major overhaul, may get another rewrite.
Meanwhile, the intense lobbying by payday lenders to preserve current law and the push by liberal and faith-based groups to curb the industry is leaving both sides edgy.
Senate Minority Leader Josh Penry on Wednesday filed a complaint against a liberal activist, alleging the man lobbied while a guest on the floor of the Senate. That violates Senate rules, said Penry, R-Grand Junction.
He asked Senate President Brandon Shaffer, D-Longmont, to permanently bar Carlos Valverde, co-executive director of the Colorado Progressive Coalition, from the floor of the chamber.
Valverde did not return phone calls and e-mails seeking comment.
Under current law, payday lenders can charge interest rates that top 300 percent, measured as an annual percentage rate.
Some church groups and advocates for the poor call payday loans usurious.
Short-term lenders say it’s unfair to apply an annual percentage rate to a loan for a few hundred dollars that’s made for only a couple of weeks. The bill that narrowly passed the House would cap interest rates at 45 percent and limit loan-origination fees to no more than $50 a year.
Payday lenders say that bill, which is now before the Senate, would decimate their industry. The bill has been put off for consideration on the Senate floor as supporters try to broker a deal that would pull in enough Democratic votes.
Sen. Rollie Heath, D-Boulder, is offering an amendment to rework the bill so that loans are offered for not less than a six-month term, with interest capped at 45 percent but allowing lenders to charge up to $30 a month in fees.
Heath said shuttering payday lenders is not his goal.
“My intent is to make it more reasonable for a loan,” he said.
Industry officials say Heath’s proposal is better than the current version of the bill but is still unacceptable.
“Our analysis of the impact is a reduction of revenue of over two-thirds,” said Eric Norrington, senior vice president of public affairs for ACE Cash Express, a payday lender with 84 stores and 176 employees in Colorado.
“We would certainly have to close stores and lay off employees,” Norrington said.
Before being postponed until today, the bill was set to come up for consideration Wednesday, the day Valverde visited the Senate floor as a guest of Sen. Abel Tapia, D-Pueblo. It’s not uncommon for lawmakers to seek special permission for guests to visit the floor, but registered lobbyists are specifically banned from setting foot in the chamber.
Though Valverde’s group has been supporting new limits on payday loans, he is not a registered lobbyist. Tapia said he invited Valverde to the floor because he is an up-and-coming Latino leader.
Penry, though, said several Democrats and Republicans complained to him that Valverde “attempted numerous times to influence members” on the payday-loan bill. He would not reveal which members complained to him, though.
Senate rules say no one allowed on the floor may “solicit or invite any senator to vote or influence any bill or matter before the Senate.”
Shaffer responded in writing that he did not witness the behavior but had seen similar things occur before.
“The best way to handle this type of situation is for senators who witness this behavior to confront the person immediately, inform them of our rule and politely ask them to quit their behavior,” he wrote.
Shaffer also said he would not bar Valverde from the chamber but would instead ask him to refrain from doing the same thing in the future.
Tim Hoover: 303-954-1626 or thoover@denverpost.com
