FRIDAY UPDATE: More coverage in today’s Denver Post and Grand Junction Sentinel.
UPDATE #3: The Colorado Statesman’s Vic Vela:
“While we certainly see the benefits of offering the loan and credit products that are considered in this legislation, it has not been clearly demonstrated that access to such loans is under threat,” Hickenlooper said in his veto letter.
The governor “was particularly struck” by testimony provided by the Attorney General’s office during a legislative committee hearing. That testimony included an analysis that indicated that changes to interest rate structures would not make these loans more available.
The bill sought to raise the maximum amount of interest charged for supervised loans from 21 to 36 percent for loans up to $3,000. Interest charges would spike from 15 to 21 percent on loans that carry balances of $3,000 to $5,000.
“These changes would result in a 200 percent increase in the loan amount allowed in the 36 percent interest rate tier and a two-thirds increase in the 21 percent interest rate tier,” Hickenlooper said. [Pols emphasis]
And the Durango Herald’s Peter Marcus:
Consumer-interest groups rejoiced on Thursday after Gov. John Hickenlooper vetoed legislation that they feared would have hurt low-income individuals applying for small loans…
“Prior to approving any increase in the allowable amount of interest charged, we believe it is necessary to more fully explore and substantiate the claim that a change in the law is necessary for these products to be accessible,” Hickenlooper wrote in his veto explanation. “Colorado’s consumers deserve this clarity as they will ultimately carry the expense that would result from this legislation.”
The governor also pointed out that the legislation moved quickly through the legislative process. It was introduced as one of the last bills of the legislative session – which ended May 6 – and sat on the calendar for only a week before it cleared both chambers. [Pols emphasis]
UPDATE #2: From the Bell Policy Center, who led the underdog opposition to House Bill 15-1390 from progressive nonprofit groups:
Today Gov. John Hickenlooper vetoed a bill that would have increased loan costs for low- and moderate-income Coloradans. The Bell led more than a dozen organizations in asking the governor to veto this bill, Allowable Finance Charge for Certain Consumer Credit Transactions (House Bill 15-1390). We greatly appreciate the governor’s action to protect Colorado consumers.
HB15-1390, which was hurried through in the last week of the 120-day legislative session, would have increased the costs of an average $6,000 loan by 38.1 percent, according to the Colorado Attorney General’s Office. The bill would have cost Coloradans more than $25 million in additional interest charges, according to a Center for Responsible Lending analysis of the two largest lenders in Colorado…
The governor’s veto represents a huge victory for hardworking Coloradans. This bill would have dramatically increased the revenues of very profitable lenders at the expense of families struggling to make ends meet. To learn more about why this bill was bad for Colorado, check out our fact sheet.
As the governor’s veto said, any additional conversations about this issue will need to include all stakeholders. If those conversations happen, the Bell will be closely involved and will do our best to ensure that all voices are included.
UPDATE: Gov. John Hickenlooper has released a letter explaining his veto of House Bill 15-1390. You can read it in its entirety here, and here’s an excerpt:
From a statement by ProgressNow Colorado, one of the groups who opposed this bill:
“House Bill 1390 was bad policy, introduced at the last possible minute to stifle debate, and written specifically to allow big lenders to hike interest rates on consumers who can least afford it,” said ProgressNow Colorado executive director Amy Runyon-Harms. “Increasing the total cost of a personal loan by almost 40% is not the way to help Colorado families get their finances in order. This legislation was sold to lawmakers in both parties based on misleading arguments and threats by big lending corporations that don’t stand up to scrutiny.”
“At a time when Colorado’s middle class families are just beginning to recover from the recent recession–a recession brought on in part by irresponsible predatory lending practices–the last thing they need is a 36% interest rate to borrow money,” said Runyon-Harms. “The truth is, personal lenders issued hundreds of millions of dollars worth of these loans in Colorado last year, and the subprime lending industry’s profits are skyrocketing nationwide. They don’t need to hike up interest rates on borrowers who can least afford it to ‘stay in business.’”
We’ve just received word that Gov. John Hickenlooper will veto House Bill 15-1390 today, a hotly controversial bill to allow large interest rate hikes on subprime personal loans that passed in the final days of this year’s legislative session. Hickenlooper’s veto comes after an urgent campaign by a few progressive and consumer groups led by the Bell Policy Center against the legislation, after it passed with dismaying speed out of the Democratic-controlled House with most Democrats voting in favor. In the Senate, most Democrats opposed the legislation after advocates were able to sound the alarm.
As for the many Democrats who voted for this bill, the Democratic House leadership who allowed it to be introduced at the end of the session, and Democratic lobbyists who convinced them it would be okay? They’ve all got egg on their faces, and may well draw heat for their actions at upcoming town hall meetings from their constituents.
And you know what, folks? They should. This was truly a low point for Colorado legislative Democrats, a significant breach of faith with their base voters–and there should be a price paid to ensure it doesn’t happen again.
We’ll update shortly with statements and coverage–a big victory for scrappy nonprofit groups, over both Republicans and backsliding Democrats in the General Assembly. And also a good day for Gov. Hickenlooper, who showed real independence from the corporate interests he is often criticized for being beholden to.
Sometimes the good guys actually do win. And that’s pretty cool.