Committee chair kills dividing payday loan bill

By AILEEN CHUANG
Associated press

INDIANAPOLIS – The chairman of an Indiana Senate committee killed a payday loan bill that was widely opposed by veteran advocates and faith groups – including the President of Indiana’s own church House – who said he would have legalized loans at rates of up to 222%.

Republican Senator Mark Messmer said on Tuesday he would not give a hearing to the bill in his Trade and Technology Committee. This effectively killed the measure, which had already been approved by a narrow margin in the House, which included a “yes” vote from Republican House Speaker Brian Bosma.

“There really was no consensus to move the issue,” Messmer, a Republican from Jasper, said of the bill that would have allowed payday lenders to charge an annual percentage rate of up to 222 percent. %.

There has been “a lot of backlash from rights groups,” Messmer said.

Messmer’s move came after Republican Senate Leader David Long said last week he was “not a big fan” of the bill.

An interfaith group of 13 clergy wrote a letter this month saying the bill “opens the door to unfair lending practices that unfairly benefit people in desperate circumstances.”

The bill would have created a new type of payday loan allowing annual percentage rates of up to 222% on short-term loans between $ 605 and $ 1,500, according to an analysis by the Indiana Institute for Working Families. This would be triple the current 72 percent limit allowed by state criminal law on loan sharking.

Indianapolis Democratic Representative Carey Hamilton sits on the House Financial Institutions Committee and opposed the bill. She said this would have enabled payday lenders to prey on the poor who can least afford such a loan.

“They are the least likely to be able to repay the extremely expensive loans,” Hamilton said, adding that the bill would hurt the economy as people “struggle and dig into a deeper hole of debt and are then not able to repay. “

The bill would have created a new category of loans, to be repaid over a period of three months to one year. The loans currently offered are generally around two weeks.

Payday lenders argue the proposal would fill a void to serve people who need money fast but have nowhere to go, giving consumers more options.

Hamilton said the current law is good enough with additional emergency resources coming from local groups and there is no need to expand it.

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