Consumer advocates asking Governor Brad Henry to veto payday loan bill
Friday, May 16th 2003, 12:00 am
By: News On 6
TULSA, Okla. (AP) _ Consumer advocates want Gov. Brad Henry to veto a bill they believe preys on the poor.
Senate Bill 583 brings back ``payday'' loans with terms of less than two weeks and annual percentage rates around 400 percent.
The bill passed the House on Wednesday and was sent to Henry for his signature.
``This is one of the worst practices that currently exists in consumer lending,'' said Steven Dow, executive director of the Community Action Project of Tulsa County.
``Out-of-state financial companies are driving a bill that only threatens the most financially vulnerable residents in the state with more ruinous debt.''
Don Hardin, administrator of the Department of Consumer Credit, said the measure undermines small loan regulation, allowing pawn and small loan shops to be unregulated when it comes to issuing postdated check loans.
He told the Tulsa World's Capitol bureau that the bill fosters a bad product.
``All this bill does is gather a group of Oklahoma consumers into a `market' and pass special laws that target them for abusive credit/debt products,'' Hardin said.
Sen. Angela Monson, D-Oklahoma City, defended the intent of the bill she authored.
``I still consider myself a protector of those who have no voice, an advocate for those who have no opportunity,'' Monson said.
``But there is a realization out there in the real world that not everyone has plus credit, not everyone when they are in need of some financial assistance can wander to their bank or credit union and say I need a line of credit or I need a short-term loan.''
Monson previously attacked similar payday legislation and several times called Hardin to testify on the loans' effect.
Hardin previously noted that 1997 revisions in the small loan industry seemed to be getting rid of the low end of the business, where loan companies made their largest profits.
The bill sent to Henry would allow postdated-check, payday-lending companies to jump back into the state, offering $100 loans with an annual percentage rate of more than 400 percent. The 1997 reforms capped small loans at 240 percent annually.
Still, Monson said her bill was a good one.
``It's a tight bill that can be implemented if it's regulated appropriately, if it's regulated fairly, I think it will work,'' Monson said. ``I'm pleased with the bill.''
Current Oklahoma law covering short-term lenders has ``no prohibitions in terms of the number of loans, how long that one can have them, how frequently they can be renewed and rolled over. Therein lies a very bad situation ...,'' Monson said.
Regulations created in her bill, she said, could eventually be expanded to cover the payday lenders.
Monson denied that her support was somehow connected to the payday industry's sponsorship of an event she recently chaired.
Community Financial Services Association and Household Finance were among the eight largest supporters of the dinner.
CFSA is the industry association for payday lenders nationwide. Household Finance recently paid $8.25 million to about 7,000 Oklahomans to settle a class-action lawsuit over its lending practices.
``That's really tacky,'' Monson said. ``That's the only thing that makes me want to be angry.
``I certainly would not ever dare to suggest that something unscrupulous occurred because I didn't get my way on a bill.''