DENVER– A payday loan regulation bill that has been the subject of intense backroom battles for weeks made its way through the Colorado House today on a 32 to 30 vote. Opponents called the bill a “job killer.” Supporters said constituents have been begging them to regulate the industry. Bill sponsor Rep. Mark Ferrandino, D-Denver, says it will face a similarly tough battle in the Senate where it will be debated in the coming days.
Democrats drew on the power of angry constituents, who they said had been calling them complaining about the recent payday industry marketing blitz that has featured robocalls drumming up fear that the legislation will end access to credit.
The version of the bill passed today caps interest rates for loans at 45 percent and allows fees up to $50 for first-time $500 loans.
Ferrandino said that these numbers are more profitable for payday lenders than the rate currently charged for similar short-term loans by credit unions, which he said charge only a lifetime fee of $25 and 18 percent interest.
Republicans fighting the bill once again drew a picture of devastating job loss among payday loan employees and an end to access to easy credit. Rep. Steve King, R-Grand Junction, held the banner for the industry on the floor, describing the bill as a “job killer” and arguing its passage would mean the destruction of 1,600 jobs in the state.
Ferrandino said these descriptions were overblown. Arizona is currently retooling the payday industry, which has no plans to move out of the state. Ferrandino said that doing what’s right for consumers doesn’t mean attacking business. That’s the false equation set up by opponents of the bill, he said.
Rep. Karen Middleton, D-Aurora, told the House that she was voting for her constituents, who had been burning up her phone lines with calls. She said her district had been inundated with information put out by the payday industry but that she was representing the people who voted her into the House.
“I didn’t expect that response,” she said referring to all the phone calls. “I normally have low constituent communication patterns but I have heard from them on this issue.”
John Kefalas, D-Fort Collins, told a similar story, explaining that he had been one of the lawmakers concerned about job loss and taking away consumer choice but that he had changed his mind based mostly on calls to his office. “I have a lot of serious concerns,” Kefalas said. “I was one of the ones who held up the process because I was not ready to vote [for the bill]… But the [payday] industry lost me when they put in robocalls with false information.” He said his constituents received those calls and, annoyed, turned around and called Kefalas. “They got those robocalls and they called me and said ‘Please vote to reform the payday lenders.’
“I have not made it easy for Rep. Ferrendino,” he said.
Rep. Larry Liston, R-Colorado Springs, joined all other House Republicans in voting against the bill. Liston said payday customers are “happy with the service.”
“The payday loan system has followed our laws and done everything we have demanded of them. The customers are happy with the services. In fact they depend on the services to get through these uncertain times.”