Payday loan lobbies are coming after Indiana regulations
Inside Subprime: April 17, 2018
By Holly Kane
Like most legislation, Indiana House Bill 1319 isn’t an exciting read. It’s 27 pages of sub-sections and clauses about things like “confidential supervisory information” and “depository institutions,” which seem distant and irrelevant. But it actually contains crucial provisions that would allow payday lenders in Indiana to charge borrowers up to three times the current legal interest rate.
Sen. Mark Messmer, chair of the committee where the bill has been pending since narrowly making it through the House, opted not to give HB 1319 a Senate hearing late February following community opposition.
“The different groups that were in opposition to it did a good job of relaying their concern to caucus members, and there just wasn’t any support at the committee level or the floor to get it passed,” Messmer said, according to the South Bend Tribune.
Just weeks before, the seven-member Lake County Council – whose jurisdiction includes Crown Point, Gary and Hammond – discussed the statewide legislation and unanimously voted to oppose it. Amending current Indiana laws and creating a new category of loan called unsecured consumer installment loans ruled would “be a hardship on the citizens of Lake County,” according to meeting minutes from February 13.
The citizens county council is trying to protect have a per capita income of about $25,000, according to the Census Bureau, which falls into the income bracket that a 2012 Pew Charitable Trusts research study found has the highest percentage of payday loan usage. In a population of about 490,000, roughly 20 percent of Lake County citizens have used a non-bank lending service, including payday loans, according to nonprofit Prosperity Now
The legislation would allow longer-term loans with annual percentage rates of 222 percent, nearly three times the 72 percent allowed by current Indiana law. Supporters say the longer terms allow citizens more access to loans.
“HB 1319 will ensure that hardworking Hoosiers continue to have credit options for managing financial difficulties,” said former state representative Matthew Whetstone in a February 23 Indianapolis Business Journal column. Whetstone now works as a lobbyist in support of the payday loan industry.
Along with the Lake County Council, various organizations voiced their opposition, including the Indiana Institute for Working Families, saying the legislation “expands dangerous and deceptive predatory lending.” Activist organization Hoosier Action published a report in February stating that the payday loan industry is trying to undermine proposed federal regulations by the CFPB. Advance America, one of the payday lending firms supporting the bill, released a statement condemning the CFPB rule in October.
To read more about predatory lending in Indiana, check out these related pages and articles from OppLoans:
- Indiana House Approves Legislation to Allow 200 Percent Interest on Payday Loans
- Cash Advance Loans in Indiana
- Bad Credit Loans: What You Need to Know