Bill to rein in payday loans fails
BATON ROUGE - A bill to cap interest rates on payday loan companies died Monday in a House commerce committee, but not without a fight. The argument went on for several hours this morning inside the committee meeting room and at moments turned into direct confrontations between those testifying and the lawmakers who voted.
"How can you sit there with a straight face that your business model is fair and just, but you had to get exempt from usury laws to operate," asked Rep. Ted James, (D) - Baton Rouge.
James came out swinging Monday against the payday loan industry, pushing a bill that would cap interest rates for lending companies at 36 percent.
"They want to be able to operate however they want," James said. "Members, we have an obligation. A fair APR, that's all I ask for."
James and other supporters said payday lenders trap poor and elderly citizens in a cycle of debt.
A study by the Office of Financial Institutions said over $145 million was paid out in interest and fees in Louisiana for 2013 to payday lenders.
But many lawmakers on the Commerce Committee weren't buying into the arguments.
"Let's say a lot of the loan companies are gone," asked Rep. Hunter Greene, (R) - Baton Rouge. "What's the alternate to the trap?"
Greene said regulation may force payday lenders out of business, leaving a need for quick money but few options on how to get it.
In the end a majority sided with the payday loan industry and the bill was voted down 10 to 8.
Supporters of the failed bill said hope is not yet lost. A similar bill is also making its way through the senate.