April 27, 2016 01:05 PM UTC

Senate Dems Vote Unanimously Against Loan Sharks

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• by: Colorado Pols

A press release from the Bell Policy Center celebrates…well, it bears some explanation, but they’re celebrating the passage of a bill they strenuously oppose: Senate Bill 16-185, a late bill to allow predatory subprime lenders like OneMain Financial to charge higher interest rates on larger personal loans.

Why would the Bell celebrate the passage of a bill they oppose? Simple: every Democrat in the Colorado Senate voted against it. In the fraught battle to protect Colorado consumers from predatory lenders who are deliberately courting Democratic support, that’s a big, big win:

Today the Colorado Senate passed (18-17) Senate Bill 16-185, meaning some senators chose to support New York hedge funds over hard-working Coloradans.

We appreciate and thank the 17 senators who stood against making Coloradans pay at least $9.5 million in additional interest and finance charges. Now we need help urging the House to reject this bad bill.

The senators who voted yes on this bill did so despite there being NO need to increase interest rates. The number of loans issued and the amount loaned has increased over the past five years.

This bill would increase interest rates on all supervised loans larger than $1,000. The bill would also increase the rates charged to Coloradans who finance the purchase of appliances, furniture and used cars. Many of these loans are more expensive than they appear because of high-cost credit products sold with them.

The Colorado Attorney General’s Office testified at the hearing on the bill there is no evidence that borrowers cannot get access to these loans or that lenders are not making them available. The lenders making these loans are highly profitable and their cost of capital has decreased dramatically since 2000. The representative from Springleaf, the major Colorado lender, told the Denver Post that the company is very profitable nationally and confirmed a 30 percent Colorado growth over the past four years.

The majority shareholder in Springleaf is the owner of Fortress Investment Group, a Wall Street Private Equity Group/Hedge Fund. Its investment in Springleaf has grown by 2,700 percent since 2010.

From here the bill moves on to the Democratic-controlled House. Last year, a bill allowing predatory lenders to jack up interest rates started in the House, and with the help of Democratic-friendly lobbyists raced out of that chamber on a 62-2 vote. All indications are as of this writing that House Democrats are not interested in getting burned again, as they were in 2015 when the pushback against the bill took leadership by surprise. We’re watching for this bill to be routed directly to the “kill committee.”

Looking ahead, what we’re seeing here could be the end–at least in Colorado–of the predatory lending industry’s corrosive influence over Democratic lawmakers. For years we have documented this struggle, first against payday lenders who tried to win over Democrats in the name of “access to credit,” and now high-rate personal lenders making almost exactly the same arguments. We don’t expect the debate over predatory lending to end entirely, but we do foresee a clearer partisan split on the issue: thanks to the patient work of the Bell Policy Center to educate Democrats.

For anyone who thinks the harm of predatory lending outweighs any benefit, stripping away its “bipartisan” veneer is a good thing.