An alert from the Bell Policy Center yesterday warns of a reprise of one of last year’s nastiest and least-expected battles in the Colorado General Assembly: another bill to allow subprime personal lenders, issuers of so-called “supervised” personal loans, to jack up interest rates on borrowers in no condition to afford it:
For the second year in a row, lobbyists for the financial services industry have waited until late in the session to introduce a bill that will benefit their clients at the expense of Colorado consumers and hard-working families.
In a session that’s supposed to be about protecting the middle class, Senate Bill 185 (Consumer Finance Charges Inflation Adjustment) would do exactly the opposite by raising the interest rates on what are called supervised consumer loans. Raising rate caps would lead to more high-cost and unaffordable credit products, hurting consumers and middle-class families.
Other than increasing profits for the out-of-state hedge fund that dominates Colorado’s market, there is no justification for this bill. Coloradans who depend on these types of loans deserve better.
In the coming days, we will be reaching out to explain how this bill will hurt Colorado consumers. Please don’t make things worse for Colorado’s working families and middle class. We urge a “no” vote on this harmful legislation.
At the tail end of the 2015 legislation session, the introduction and lightning-swift passage of House Bill 15-1390 through the Democratic-controlled House took consumer advocacy groups like the Bell Policy Center by surprise. Rallying opposition among Democrats in the Senate, and then fighting off Democrat-friendly lobbyists with a grassroots campaign publicly calling on Gov. John Hickenlooper to veto the bill, a scrappy coalition led by the Bell obtained one of only three vetoes issued by the governor in 2015. As a result of last year’s punishing blue-on-blue fight, we’ve heard that House leadership refused to allow another late bill to run through their chamber–hence the Senate bill introduced this week.
This year’s legislation is somewhat different than House Bill 15-1390, which permitted tiers of higher interest rates to be charged on larger loan amounts than current law. Senate Bill 16-185 would allow a huge increase in interest rates on amounts loaned by adjusting the loan amounts for seventeen years’ worth of inflation–from 2000 when these subprime personal loans were authorized though 2017. Thereafter the loan amounts subject to higher rates would increase annually by inflation.
The mechanism is a little different, but the intent is the same: to jack up interest rates on personal loans made to borrowers at the lower end of creditworthiness.