Payday Loan Reform

LWVAL Action Priority Level I (Highest) - Monitoring and action of highest priority. Major area for resource expenditures.

Click a bill to see sponsor(s), synopsis, link to the bill, League action and justification for that action, and progress of the bill through the legislative process.

Legend:
thumbs_up_icon.jpg = LWVAL's support for the legislation.
thumbs_down_icon.jpg = LWVAL's opposition to the legislation.
green-right-arrow.jpg = new bill activity; change from previous week's report such as new progress in the legislature and/or League action. Bill may be one newly added to the report. These updates are in green font.

Contact information for legislators and committees referenced in the bills below:
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LWVAL has taken a position on these bills:

thumbs_up_icon.jpgHB321 - Constitutional Amendment - Consumer loans, lines of credit, financial products, interest rate, capped, const. amend.

Sponsor(s): Representatives Fincher, Drake, Wingo, Scott, Rogers, McCampbell, Mooney, Beech, England, Forte, Beckman, McMillan, Jackson, Alexander, Crawford, Buskey, Howard, Boothe, Gaston, Givan, Rich, Millican, Johnson (R), Patterson, Ledbetter, Ball, Rowe, Treadaway, Hall, Sanderford, Farley, Pettus, Wadsworth, Williams (JW), Hanes, Whorton (I), Butler, Faust, Nordgren, Warren, Drummond, Whorton (R), McCutcheon, Lee and Coleman

Synopsis: The maximum interest rate a lender may charge an individual on a consumer loan, line of credit, or other financial product shall be 36 percent per annum, as defined by the Federal Reserve Board in Regulation Z of the Truth in Lending Act, and the Legislature may not by general or local law authorize an interest rate of more than 36 percent per annum.


League Action and Justification: Support - The LWVAL position on payday lending calls for a cap of 36% on lending. This legislation applies to this and other types of loans and should stop the development of new instruments that seek to use exorbitant rates of interest.

Additional legislation is still needed to protect consumers from exorbitant fees and special charges.

Bill Progress in the Legislature:

02/28/2017: First Reading and referred to the House committee on Constitution, Campaigns and Elections (CC&E)

thumbs_down_icon.jpgHB314/SB249 - Small loans under Ala. Small Loan Act, maximum amount of loans increased and corresponding interest rates, max term of loans, Secs. 5-18-4, 5-18-10, 5-18-13, 5-18-15 am'd.

HB314 Sponsor(s): Representatives Johnson (K), Collins, Martin, Shiver, Lee, Moore (B), Brown, Rogers, Rowe, Hammon, Carns, Davis, Wood, Greer, Nordgren, Black, Williams (JW), Clouse, Drake, Ellis,
Ford, Crawford, Butler, Blackshear, Scott, Patterson, Wadsworth, Weaver and Wingo
SB249 Sponsor(s): Senators Dial, Whatley, Ward, Livingston, Waggoner, Shelnutt, Albritton, Holley, Beasley and Smith

Synopsis: This bill expands the Small Loan Act to include loans of up to $1500 (instead of $1000). It places these loans on a more expensive rate basis and tacks on some additional costs.


League Action and Justification: Oppose. Our position on payday loans recommends an interest cap at 36%. The loans covered here would have a higher interest rate than that (up to 174%) and higher than they do now (about 30%) making borrowing more expensive for low income people.

Both the Southern Poverty Law Center and Alabama Arise are also opposing these bills. LWVAL issued this
Call to Action 4/22/17 to oppose HB314.


Bill Progress in Legislature:

SB249

02/28/2017: Read for the first time and referred to the Senate committee on Banking and Insurance


HB314

02/23/2017: Read for the first time and referred to the House committee on Financial Services (FS)

03/09/2017: 2nd Read and placed on the calendar; Pending 3rd read and Favorable from FS


thumbs_up_icon.jpgSB284 - Banking, loans and consumer credit transactions, small loans, acquisition charge prohibited on refinances within first six months, deferred presentment transaction, term set at 30 days, total transactions limited, collection activity limited, repayment plan for certain transactions set at three months, interest on loan over $2,000 limited, Secs. 5-18-15, 5-18A-3, 5-18A-12, 5-18A-13, 8-8-5 am'd.

Sponsor(s): Senators Orr and Smitherman

Synopsis: According to Arise Citizens' Policy Project Executive Director Kimble Forrister, this bill, "crafts a compromise between the needs of consumers and lenders. Payday lenders would be allowed to charge $17.50 per $100 borrowed, and borrowers would get 30 days to repay. If they couldn’t repay then, there would be an “exit ramp”: The loan would convert automatically to a three-month installment loan with interest of 3 percent per month. Borrowers could only take out four loans every 12 months, and they’d have a seven-day “cooling-off” period between loans.... The bill’s reforms would protect borrowers across Alabama from getting caught in a debt trap."


League Action and Justification: Support - LWVAL issued this Call to Action 4/18/17 to support SB284.

Bill Progress in the Legislature:


03/07/2017: Read for the first time and referred to the Senate committee on Judiciary (JUDY)

03/09/2017: Rereferred to Committee on County and Municipal Government (C&MG)

04/06/2017: Rereferred to Committee Banking and Insurance (B&I)

LWVAL is monitoring these bills:
[none at this time]


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