April 27, 2011 01:45 AM UTC

"Payday Payback" Slowed Down By Senate

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• by: Colorado Pols

We’re surprised to see this after the speed at which House Bill 11-1290, the so-called “payday payback” bill to loosen reforms passed last year on controversial payday lending practices, tore through the GOP-controlled House a few weeks ago. As the Colorado Statesman’s Marianne Goodland reports, the “payday payback” has stalled in the Senate, due to a combination of more pressing business and a stout grassroots opposition campaign:

[T}hree weeks later the bill, sponsored by Sen. Rollie Heath, D-Boulder, isn’t on the schedule for a hearing in the Senate Finance Committee to which it has been assigned.

Part of that can be attributed to the Senate work on the 2011-12 budget, which wrapped up on April 11. Since then the delay can be attributed in part to the fact that its Senate sponsor is also co-chair of the Joint Select Committee on Redistricting, which this week is back in negotiations over congressional district maps.

But there’s a third factor at play: mounting opposition from nonprofit groups that supported the 2010 legislation and negotiations with Democrats that don’t always include the bill’s sponsor…

One of the primary backers of last year’s payday reform bill is Corrine Fowler of the Colorado Progressive Coalition and Coloradans for Payday Lending Reform. She said Tuesday that the coalition never would have agreed that the origination fee was fully earned at the time of the loan. “Sen. Heath never intentionally or directly worked with the coalition at any time in the last four years,” she said. “We understand if Sen. Heath has a different memory but we would never have agreed to the origination fee” as is proposed in HB 1290, she said.

Fowler said that making the origination fee fully earned will drive up the annual percentage rate on a 30-day $300 payday loan from 86 percent to 289 percent.

We’ve gone over the details of this proposed change a couple of times now–it boils down to a one-time “origination fee,” and whether that fee should be nonrefundable, even in part if the borrower repays their loan early. The Attorney General’s current rule is that the fee must be refundable on a pro rata basis. This bill would, uh, “clarify” that ruling, resulting in millions of dollars more in profits annually for payday lenders.

That’s the question, since this legislation would alter the current policy payday lenders in the state operate under today. Do payday lenders really need all this extra money, more than consumers need incentives to pay off their loans quickly? Or do they just want it?

It looks like in the Senate, unlike the House, there might be patience enough to get an answer.