April 09, 2010 11:27 PM UTC

Payday Lending Reform Still Alive

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• by: Colorado Pols

UPDATE: As a Pols reader pointed out in the comments, Colorado is not the only state to be going after Payday Lenders:

In the most severe case, Arizona lawmakers are on the verge of shutting down the entire industry in the state. A law took effect in Washington this year capping the amount of payday loans and the number that a borrower can take out in a year. And in Wisconsin, lawmakers are locked in a heated battle over whether to regulate the industry.

Arizona’s state legislature is dominated by Republicans, and their state budget deficit is one of the worst in the country (so they obviously aren’t being swayed by scare tactics about job losses). Colorado’s legislation doesn’t come anywhere near what they are doing in Arizona, which should be more than enough to convince holdout Democrats to approve Colorado’s version.

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The Denver Post’s Tim Hoover writes for The Spot:

Supporters of legislation to put new limits on payday loans are hoping the second time is the charm.

A reworked version of the bill passed the House Judiciary Committee on a 7-4 party line vote [yesterday], the second time the bill has come out of the committee this year.

The original version of the bill, which would have limited interest on payday loans to no more than 36 percent a year, never came to a vote on the House floor because supporters could not get the necessary 33 votes to pass it. After sitting in the House for weeks, the bill was finally sent back to Judiciary this week for a rewrite.

The new version of the bill caps interest rates on payday loans at 45 percent and limits lenders to charging no more than a $50 annual origination fee on loans.

We’re hearing rumors of a change of heart among certain fence-sitting legislators who have been subjected to intense pressure in the last few weeks–primarily from the extremely well-funded lobbying operation against the bill, but also from proponents who kept going after many pundits had written this legislation off. It’s believed by some that the saturation lobbying campaign from the industry has reached a point of diminishing return, possibly crossing over into backlash territory.

Kind of like the spam did.