Colorado GOP payday gamesmanship stokes already hot partisan fires

DENVER– On Tuesday afternoon, Colorado Springs Republican Rep. Bob Gardner set off a firestorm on the House floor and in the Twittersphere when in the last hours of the 2011 legislative session he amended the annual rules bill to strip out regulations passed last year on payday lending. It was a surprise move sure to generate rancor and just the latest battle in the ongoing war over payday lending in the state.

Gardner said he was acting to redress what payday supporters see as an overreach by the attorney general’s office last summer in interpreting legislation regulating the short-term loan industry .

“The clear intention… last year was that origination fees could be retained by the lender. Then a rule was enacted to prohibited that,” Gardner said. “The amendment says that that rule will not be extended. That is the reason that I am offering this amendment.”

Corrupting the process

House Democrats rose against the amendment as an attack on the legislative process. Some said the move could engender constitutional changes. Most said it was simply wrong to jeopardize hundreds of state rules governing the economy just to do the bidding of the payday loan industry.

“This is a corruption of the process,” said Boulder Democrat Claire Levy. “I have come down here many times to defend the processes that we have in the Colorado General Assembly– that when we bring forward a rule review bill, it is a rule review bill, and we don’t worry about booby traps or little secrets hidden in there, [because] we know it has gone through the process.

“Members, this is highjacking the rule bill. It corrupts the process. We need a ‘no’ on this.”

Levy said Gardner, with House Speaker McNulty’s blessing, had opened a new chapter in legislative gamesmanship that would now be used whenever legislators don’t get their way through the normal process.

A Ferrandino filibuster

Denver Democrat Mark Ferrandino, who sponsored the payday regulation legislation last year, filibustered after Gardner introduced the amendment. He stopped talking after 45 minutes.

“I decided I needed to let some other people’s bills pass,” Ferrandino told the Colorado Independent. He said he expected the Senate to strip out Gardner’s amendment Wednesday, which would force House members to decide whether or not to kill the bill.

“This would have a huge impact on Colorado services,” Ferrandino said. “Roughly $85 million to businesses… So, if they want to play this way, by raising interest rates on consumers, then they are going to be seriously harming the state of Colorado.”

The bill, SB 78, extends hundreds of rules that govern all kinds of business in the state.

Playing chicken

McNulty, R-Highlands Ranch, said he planned on sticking to his guns even if it meant killing the bill and forcing the state to fund a special session of the legislature to wrangle over the issue and eventually pass some version of the rule bill.

Although Democratic supporters of payday lending Ed Casso of Commerce City and Sue Schafer of Wheat Ridge both initially supported the amendment, they reversed their decision when Ferrandino called for a vote on an amendment that would remove Gardner’s amendment.

The Republican one-seat majority passed the bill, adding fuel to the fires that have been raging between state Democrats and Republicans this session as they have wrestled with the understandably charged task of congressional redistricting, work that appears finally to have crashed on the rocks of partisanship this week and that will now be decided in the courts or in a special legislative session.

Payday money

Payday lenders shelled out $90,000 since the end of last year’s session to lobby lawmakers here.

Corrine Fowler, a consumer rights advocate with the Colorado Progressive Coalition who worked on lat year’s payday legislation, said that, in addition to spending $93,000 since last May in lobbying, the payday industry gave $59,000 in campaign contributions to primarily Republican candidates.

The lobbying effort worked to at least get a bill introduced this session. Boulder Democrat Rollie Heath introduced HB 1290, which aimed to rollback regulations on loan origination fees. Heath’s bill failed to make it through the Senate. Opponents said payday lenders would tailor loan products to encourage borrowers to take out loans to pay loans, paying origination fees again and again.

One long-time Republican lobbyist not associated with the payday industry told the Colorado Independent that this year political gamesmanship has reached new highs.

“Somebody has been studying the rules,” he said.

[Image: Speaker Frank McNulty ]