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Rep. Sue Schafer's Vote May Kill Payday Lending Bill

by: Colorado Pols

Wed Mar 17, 2010 at 11:55:13 AM MDT


Democratic Rep. Sue Schafer (that's her on the left) appears to be the vote that may kill the Payday Lending reform bill we have written about repeatedly in this space (ever since Payday Lenders started spamming us).

The Payday Lending reform bill hasn't seen much action since a flurry of activity a week ago, and we hear that has a lot to do with Schafer's opposition after listening to former HD-24 Representative (and current state Senate candidate) Cheri Jahn, who worked to kill previous Payday Lending reform bills when she was in the legislature.

That's right -- two Democrats from a strongly-Democratic district may be primarily responsible for killing Payday Lending reform for the second time.  
Colorado Pols :: Rep. Sue Schafer's Vote May Kill Payday Lending Bill
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Rep. Sue Schafer's Vote May Kill Payday Lending Bill | 44 comments
Given Jahn's past as a payday lending apologist
I was curious about the results of any of the Ruchman/Jahn precincts.
Me, too. n/t


"The only way you could be worse is if you were Wade Norris." Ralphie
[ Parent ]
ruchman was doing well from what i heard
more proof primaries are a good thing.


PRAER.org
[ Parent ]
I like Dave a lot
I know exactly where he stands on the issues and he is a pragmatic progressive that understands there are some things you compromise on and some core values you can not compromise on.  
[ Parent ]
Ditto.


We're all in this story together: Let's make sure that we write it well.
http://www.steveharveyforcolor...
[ Parent ]
At my Arvada...
precinct we did a straw poll and the results weren't even close:
10/0/3--Ruchmann/Jahn/Uncommitted.

"But when I see a 9-11 victim family on television, or whatever, I'm just like, 'Oh, shut up!' I'm so sick of them because they're always complaining."  Glenn Beck  
[ Parent ]
So...
If you're one of many dems voting against a bill, how is it that you get the distinction of being THE vote that kills it?  I'm a little confused...
Shaefer isn't the only one
There are SIX House Democrats who voted against HB08-1310 (Ferrandino's last effort on this) who are still in the House.
[ Parent ]
By the way...
HB08-1310 DID NOT die in the House...it was killed in the Senate Appropriations committee on a motion by one of its co-sponsors.  So the House Dems that voted no did not kill this bill.
[ Parent ]
Huh... sounds like tuition equity last year.
Last year, tuition equity died because of two Democrats.  This latest episode with Payday Lending is just another indication that when it comes to issues that impact low income communities of color, Democrats can't be trusted.  
That's an interesting generalization, Julie
Republicans can?
[ Parent ]
Republicans can be trusted to screw the little guy.
n/t
[ Parent ]
Republicans can be trusted
to suck. Julie makes a good point. I think she's spot on.  

This blog is your blog, this blog is my blog
[ Parent ]
but it is a generalization,
but on issues like what she mentions, I think she's right. It's always risky to ask Democrats to challenge the status quo, even if it would benefit the majority.  

This blog is your blog, this blog is my blog
[ Parent ]
Sort of Like
When four Dems deserted and voted for parental notification.  And the Dems wonder why the one-issue groups aren't so supportive.  The Republicans don't have this problem.  How about a little enforced party loyalty???  What's wrong with the leaders down there????
[ Parent ]
If I had to name one thing wrong with our politics today
it would be enforced party loyalty.

"... politics has been divided between two types of people: those who want more people to vote, and those who want fewer people to vote."
- Sen. Kerry
[ Parent ]
That's definitely one major problem
[ Parent ]
Anyone have a whip count?
I'd love to know who's standing in the way of this besides Schafer - there has to be more than one...

"I have come to the conclusion that the making of laws is like the making of sausages-the less you know about the process the more you respect the result."  -- Anonymous IL State Rep. circa 1878
Maybe...
It's because they're unsure of the unintended ramifications that this bill may have. If payday advance stores are run out of the state, poor-low income families will not have any financial options when it comes to emergencies other than overdraft fee's or crime syndicates. I know everyone's response to this post is going to be that payday stores will continue to make a killing, but that's based on speculation. What are the alternatives "if" this were to happen. If someone could address this issue, I would be much happier with the legislation and i'm pretty sure Sen Schafer and Rep Jahn feel the same way.  

"I am not worried about the deficit. It is big enough to take care of itself." -Ronald Reagan
They've already heard the alternatives
A number of credit unions have alternative loan structures, and payday loan stores shouldn't (all) go out of business from this law - their default rates aren't much (if any) worse than the credit card companies who "get by" under the usury laws.  Also, I don't know how many banks offer them, but micro-loans (growing in popularity in many poorer nations) may do well for a number of these borrowers.

If you've missed this, you haven't been following the debate close enough.

"I have come to the conclusion that the making of laws is like the making of sausages-the less you know about the process the more you respect the result."  -- Anonymous IL State Rep. circa 1878

[ Parent ]
Debate
You're right, I haven't kept up with the debate, although i'd like to know what credit unions you are referring to and where they're located. Location is vital for low income folks, that's why payday stores are "conveniently" located near low income communities.

Also, I've launched micro-loan programs in third world countries but don't know of any in Denver, who is offering these here in Denver?

You may be right, but a lot of this is just talk i'd like to know specifics otherwise these so-called solutions aren't going to be a reality for those who need financing options.

Hope you're right Phoenix Rising...

"I am not worried about the deficit. It is big enough to take care of itself." -Ronald Reagan

[ Parent ]
You wanted to know alternatives
The micro-loan solution may not even be available locally, but it is a viable alternative and works well around the world, as you know.

As to credit unions, etc. it looks like many of the credit unions here in the state either offer or will be offering this year a payday loan alternative.

The Center for Responsible Lending offers this page of alternatives to payday loans, including some that are more helpful than others.

"I have come to the conclusion that the making of laws is like the making of sausages-the less you know about the process the more you respect the result."  -- Anonymous IL State Rep. circa 1878

[ Parent ]
Issue with this alternative
The main issue isn't about credit unions and community banks offering relevant products, BTW- i'm a huge supporter of community financial institutions, the problem lies in the membership qualifications. Many low income folks with bad credit cannot even get their foot in the door with community financial institutions. We need something in place this year if we're going to pass this thing...

"I am not worried about the deficit. It is big enough to take care of itself." -Ronald Reagan
[ Parent ]
What issue is that?
Denver Community CU is open to all Denver County residents, workers, etc.  Membership is by opening a $25 savings account (one-time $5 membership fee applied on joining).  Credit Union of the Rockies (Golden, Summit and Gilpin) is similar.  Community-oriented CUs weren't common in the past, but they've become more common in recent years.

"I have come to the conclusion that the making of laws is like the making of sausages-the less you know about the process the more you respect the result."  -- Anonymous IL State Rep. circa 1878
[ Parent ]
Great to Hear
I'm glad to hear that PR. The question now is how do we expand that network so that it's viable. Thoughts?? Whatever it is i'll be a staunch supporter of the effort. Also, just to clarify so if someone were to open an account today with $25 would they be able to get a $100-200 loan tomorrow?

"I am not worried about the deficit. It is big enough to take care of itself." -Ronald Reagan
[ Parent ]
Clarifications
Most of the credit unions have minimum membership period requirements on loans - you can't walk in today, put in your $25 membership share and walk out with a $200 loan tomorrow.  But I don't think it's too much to ask to educate people on the availability of some of these options.  Payday lenders could morph into similar arrangements - it won't kill them if they want to make the effort to transition from predatory loan sharking into responsible community providers.

"I have come to the conclusion that the making of laws is like the making of sausages-the less you know about the process the more you respect the result."  -- Anonymous IL State Rep. circa 1878
[ Parent ]
Needed distinction
Just to make it clear, these types of loans did not exist previous to 2001.  Low-income people were still able to meet their needs with the financial services that were offered by traditional banking institutions.  Payday loans create the problem they purport to solve.

Unlike overdraft fees and credit card charges, payday lenders charge their excessive fees EVERY TWO WEEKS, not just when an account is overdrawn.  

Data shared by the Attorney General's office at the House State Affairs committee on HB 1351 indicated that most payday loan borrowers have these loans longer than 6 months consecutively!  This means that the lender is charging a loan origination charge every two weeks to renew the loan.  This  means a $105 fee charge on a $500 loan every two weeks.  If payday lenders were upfront about this practice, I assume most consumers would choose to take the one-time overdraft fee or an interest rate increase on their credit card instead of thousands of dollars over a longer period of time.

In addition to new lending products offered by credit unions and micro-lenders, traditional banking alternatives exist but the payday lending industry has worked very hard to be the only game in town.  Payday loans are a bad product that harm many people. A defective product should not be sold, even if it is "all people can afford".  Predatory lending practices shouldn't be the only thing that low-income people deserve.

[ Parent ]
The Record...
So I have looked up legislative records on this...

Seems that Cheri Jahn voted IN FAVOR of 2 payday lending bills:

HB 07-1261 and HB 08-1126

She did vote no on HB 08-1310 along with DEMS Debbie Benefield, Jeanne Labuda, Buffie MacFadyen, Wes McKinley, Joe Rice, Jim Reisberg, and Rafael Gallegos.

Nonetheless, it passed the House.  As I said above, the Senate Appropriations committee killed this bill.  Wouldn't hurt Pols to try and put a few facts behind their assertions once in a while...

The two bills you cited
are "gut" bills.  Empty bills designed to be worthless, but allow a legislator to vote in favor of nothing.
[ Parent ]
How so?
HB 07-1261:
"The bill requires deferred deposit lenders (payday lenders) to offer payment plans to
consumers at the time of origination of a fourth consecutive payday loan, and all subsequent loans
thereafter."

Seems like a mandate on the lenders to me....


[ Parent ]
read the Truth about Pay Day lending
http://www.thebell.org/node/3322

it explains how 1261 fails to help anybody

[ Parent ]
That is very true...
But nobody at the time realized that.  The bill was passed as a compromise to reign in the lenders.  From what I understand, they have not complied with the legislation.  

I think it's more than a stretch to blame that on a single legislator.  This was in 2007, we are now in 2010.  We have seen the effects of legislation and can now adjust accordingly.  

I guess I would hope that CURRENT legislators be held accountable for what they vote on now.  It is unfair to go after others...

[ Parent ]
Thanks Danny
Keepin' em honest.

"I'll take incompetence over a business model incentivised to kill me any day." -- DtR(H)
[ Parent ]
Goddamn right.
You don't get to use gutted bills as a defense for voting against the real one. Ooo, a bill number! Who do they think reads this blog, anyway?!

Sorry, but as much as you try, I just can't buy in to the idea that every Democrat is evil except for Andrew Romanoff.
[ Parent ]
This post is bullshit...
Jahn isn't even in the house in amymore and you're still reaching for an excuse to blame her for this bill not passing?!  It takes 6 Democrats to kill a bill on the floor, 7 this time if Roberts is still with us.  

And just so far we have Benefield and Riesberg that have pasisonately spoken on the floor against it, and no votes from last time are still around while many yes votes are not longer in the house.  McFadyen, Labuda, McKinley, and Rice are all against and that alone adds up to 6.  Even Todd is a no and Curry who is a damn cosponsor!

In total that is 8 even without Schaefer, so to blame this even on her vote alone would be a stretch, but saying she has no mind of her own and listens to no opinion but Cheri Jahn is ridiculous!  

Oh my stars!
It's called "pressure," and I agree that it's less fun when it happens to your friends.

Deal with it, grow a spine and pass this popular bill, ok?

Tell you what, why don't I write some more diaries, "Rep. ______ __________'s Vote May Kill Payday Lending Bill." And it'll be just as true for each one! They can't all be your friends, right?

Sorry, but as much as you try, I just can't buy in to the idea that every Democrat is evil except for Andrew Romanoff.

[ Parent ]
Loan Sharks
These operations are not "loans". Anything that keeps people trapped in a loan, can't repay, next loan cycle is not a legitimate loan operation.

Again, these operators did quite well at 36% before the Repubs gave them to go ahead to take in 400% or 600% non-usurious loan sharking deals.  It is not a loan.

If it is good enough at 36% for our active duty troops it is good enough for our Colorado citizens. I think that is still too high. 25% limit would be better.



This movie has been rated PG-13 for sci-fi violence and destruction
@pambennettauror

What kind of Democrat is she anyway?
Sue,

Remember who elected you.  Get a backbone.

The Reason
Why Sue Schafer and Cheri Jahn get more criticism for being a no vote is because they come from such a safe Democratic district. Representatives like Rice and Benefield are in districts that are harder to hold so the tiniest backlash on a good bill could hurt them. There's no reason for Schafer or Jahn to vote against this bill unless it is because they think payday lenders are doing something good. A lot of progressives disagree.
I'm one of them.
I like Sue a lot. I think she's an excellent person. I'm not going to speak for her, but I can imagine several possible legitimate justifications for opposing this bill, and I assume that Sue is motivated by one of them (or by one I haven't thought of). I can respect that.

But I encourage her, and all other members of the Democratic caucus, to support pay-day lending reform. As it currently exists, it's a form of exploitation of the most economically vulnerable. There's no need to permit it to persist.

And I'm glad this thread has been as civil as it's been. We can treat our representatives with respect even when we disagree with them, and even while we encourage them to change their mind on a vote. That's the way it should be.

We're all in this story together: Let's make sure that we write it well.
http://www.steveharveyforcolor...

[ Parent ]
Schafter's response to me
Here is Rep. Schafer's response to my e-mail urging her to support the bill.
Dear Mr. Dodd,

Thank you for contacting me regarding HB 1351.  It has not come up for a vote on the House floor yet and six Democrats are opposed to the bill as written.  The majority of my constituents in House District 24 are also in strong opposition to HB 1351.  I have received many letters, emails, and phone calls from my constituents urging me not to support the bill because it may put them, and 1500 other employees, out of work. These employees are also provided health benefits by the PayDay companies.

Pay Day lending is a legal business, regulated by the Colorado Attorney General. I think the passage of HB 1351 will do more harm than good, forcing borrowers to go to more risky and unregulated sources for higher interest loans of up to 1000%.

I appreciate you taking the time to express your views.

Respectfully,

Sue


She says a majority of her constituents oppose the bill.  That is a surprise to me.  
[ Parent ]
it sounds like a majority of her constituents
work at payday lending stores, the way she describes it. I find that hard to believe.

And she's identified even "more risky and unregulated sources for higher interest loans" than payday lenders, charging "up to 1000%" interest? What are those, actual loan sharks? If she's got a problem with usurious lenders, why isn't she going after these other sources? Sounds like a smokescreen.

[ Parent ]
Good Point, but ...
It is not just about political risk.   They are not elected with the sole purpose of being reelected.  They are elected to stand up for Democratic values and act in the best interests of the people who put them in office.  Payday lending is legalized loan sharking, so if some of them go under, so be it. 39% is a more than a fair interest rate. It is a shame Sue supports these payday lenders.  
[ Parent ]
Oh, Goodie! I just love litmus test lists!
While we're piling on, I'd like to add a few other businesses that need to go too!

I want all Democratic Legislators to end the Casino Businesses! I mean, they serve no legitimate purpose whatsoever.  All the money spent there could better go to improving the world!

Since we're at it, I want all Democratic Legislators to pledge to end pornography. EVERYONE knows that the industry serves only to exploit women and children.  It needs to stop, and I mean TODAY!

Finally, I want an irrevocable pledge from all Democratic Legislators that they will put an immediate end to the Insurance Industry Parasites.

Anyone not willing to sign a pledge on these issues needs to leave public office immediately!  

Rep. Sue Schafer's Vote May Kill Payday Lending Bill | 44 comments
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