Bill to control payday loans moves ahead in Senate
Associated Press Writer
A bill targeting high-interest “payday loan” businesses faced some resistance but managed to win approval Thursday on a 4-1 vote in a key Nevada committee.
The Senate Commerce and Labor committee endorsed AB478, with Sen. Warren Hardy, R-Las Vegas, casting the lone opposing vote. Other panel members expressed reservations about the bill, but voted to send it to the full Senate.
A few payday loan companies have continued to resist the bill sponsored by Assembly Speaker Barbara Buckley, D-Las Vegas, and passed unanimously last month by the Assembly.
Representatives of the businesses insist they are “installment lenders” that should be regulated differently. But the Senate committee rejected their amendments which would have allowed them to continue to charge high interest rates for long periods.
Buckley argues the companies are evading a 2005 law and are “motivated by greed.” The 2005 law and the AB478 fix have received support from larger, established payday loan companies – that Buckley says are obeying the law to their competitive disadvantage.
“It is a tough battle, because they (the evading companies) are making so much money,” said Buckley. “I do not believe you have to charge someone 500 percent interest for a year to make money. “
All payday lenders charge high interest rates, ranging up to 900 percent, but under the 2005 legislation can only charge such high rates for 30 days.
If a lender can’t pay back at that point, the lender must drop the interest rate. The law also limits late fees, and requires lenders to make certain disclosures.
Hardy said that while the loans do have high interest rates, the lenders were taking on high-risk customers, as well.
“We’ve got to get to the point where there’s some responsibility from the consumer to protect themselves,” said Hardy. “I do think our duty here is very narrow.”
Sen. Joseph Heck, R-Henderson, said that the bill’s good provisions, including steps to protect the military from payday lenders, were important.
But he also was concerned about the bill.
“I think we’re going to wind up putting several businesses out of business,” said Heck. “We may wind up revisiting the measure.”