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February 04, 2010 11:25 PM UTC

Ferrandino Ponders Payday Lending Reform Battle

  • 19 Comments
  • by: Colorado Pols

We had heard previously that new legislation from state Rep. Mark Ferrandino to curb the excesses of the “payday lending” industry, an issue which has turned into a lobbyist bloodbath in recent years as the industry poured money into bitter opposition to any attempts to regulate them, was likely to be introduced later in the session–the Colorado Independent updates:

Ferrandino told the Colorado Independent he is considering trying again this year. He has worked with local consumer advocate groups to draft rough legislation but he is proceeding cautiously and is “not positive” yet whether he will actually introduce the legislation.

“If we can get through a bill this year that is meaningful and protects consumers from this predatory practice- If we think can do that, then we are going to introduce legislation,” he said. “I am up against a very strong lobbying core and they have a lot of money and a lot of influence down here. They have the ability to take any bill that is moving forward and shape it to their own interests and really stop any real reform. I want to make sure I have my ducks in a row before I go ahead on this.”

…Carlos Valverde, co-executive director for the Colorado Progressive Coalition, who has been working with Ferrandino on draft legislation, said that one way to avoid lobbyist pressures was to refer the bill to a vote of the people. One proposed draft of the legislation now is a referendum.

“We are very excited about it,” Valverde said. “We just got some polls back that said it is hugely supported between both Democrats and Republicans.”

Ferrandino agreed that a referendum might be the way to go. Lawmakers, he said, “are sometimes more willing to let the voters make that kind of a decision.”

Rich Jones, a director at the Bell Policy Center, said that his group has also been working with Ferrendino on possible legislation for this year’s session. He explained that his group would recommend imposing an interest rate cap of 36 percent on payday loans. He said similar rates have been adopted by both the federal government for Service members and their families in a number of states. In the case of the military, he said, the government has determined that payday loans were predatory and negatively affected the preparedness of the troops.

If a referred measure is what it takes to get reform of this singularly predatory industry past the gauntlet of lobbyists determined to keep the practice of charging 400%+ interest rates legal, we’re all for it. In addition to desiring revenge for the repeated spamming of our blog, we’re in full agreement with studies from the Bell Policy Center and elsewhere that show clearly what a devious economic trap “payday loans” spring on the state’s most vulnerable citizens.

For the record, though, if it’s decided to go ahead and pass these reforms through the legislature, and we have to publicly, each and every day list the names, lobbyist contacts and bad excuses of every legislator who opposes reforming this predatory business–what we used to call usury that now infests virtually every strip mall in the state–we’re prepared to do that. In our opinion, this is both morally and politically the right fight for both sides of the aisle: anyone worried about the well-being of their constituents in hard economic times, and that should be everyone.

Somebody let Rep. Ferrandino (and anybody else, from either party, who tackles this) know we’ve got his back, okay? Bring it on. And stop spamming us.

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19 thoughts on “Ferrandino Ponders Payday Lending Reform Battle”

  1. I don’t see how one can managed to get the votes one needs for a referendum when one doesn’t have the votes need for an initiative.

    But, last time around opposition within the Democratic caucus killed the bill, and there has been some turnover with new appointments from vacancy committees that may change the balance of power on this narrow issue which produced some very close votes last time.

    1. The Independent article says that the last time Ferrandino tried to get this legislation passed was in 2008. I believe is passed the house, but that Jennifer Veiga led the charge against it in the Senate.

  3. I’m a huge fan of Ferrandino and think some reform is necessary. Just need to make sure that poor and blue collar folks have a way of getting loans for emergencies since banks are willing to lend to these folks. Hope the legislation/referendum is pragmatic.  

    1. I’m a huge fan of Ferrandino and think some reform is necessary. Just need to make sure that poor and blue collar folks have a way of getting loans for emergencies since banks aren’t willing to lend to these folks. Hope the legislation/referendum is pragmatic.  

      1. be driven out of the state? I thought this was about setting reasonable requirements on them, same as they face in other states where they continue to offer loans but within certain restrictions.

        1. Some of the things in Ferrandino’s first bill were horribly radical, industry crushing proposals like:

          • Limiting fees to $10 for every $100 borrowed with a $30 cap.
          • Capping interest rates at 36% APR
          • Prohibiting payday lenders from lending to people who already have an unpaid loan with a different company

          Truly the payday loan industry will never survive if they have to charge reasonable interest rates instead 456 bajillion percent.

  4. …for a referendum?  Won’t the lobbyists pressure legislators to refer a question most acceptable to the lobbyists’ clients?  Or, to not refer a question at all?

    1. The legislators can pass the buck and say “it’s something rational for voters to decide upon” without committing their support or opposition.  They can even work against it during the campaign season.

      And the payday loan industry should have some pretty good stockpiles of cash to spend on opposing the measure.

      It’s not much, but just a little bit of relief on the pressure valve might flip a vote.

      1. I don’t doubt anything you said.  But I also think legislators should stand up and pass the laws they think should exist, rather than punting to the voters.  We elected legislators to legislate, not to ask us to do their job for them.

  5. A bill that would put a ceiling on the interest these pay day loan sharks place on loans to struggling families should pass this year.  Mark, give your former council representative in Thornton a call if you need someone to testify at a hearing.

    Placing it on the ballot this Nov. would definately pass by a huge margin. As far as public opinion goes, banks are not high on peoples favorite lists right now. My guess is that 60%, maybe, 70% of the voters would vote for reasonable boundaries for this industry. 400% interest doesn’t pass the straight face test.

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