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Payday lenders: loan sharks or endangered species?
By Eli Stokols KDVR Denver Published: 03/08/2010
DENVER - A controversial proposal to cap the interest rates that can be applied to short-term or "payday" loans is still alive after a five-hour hearing at the State Capitol.
The House Judiciary Committee voted 7-4 in favor House Bill 1351, after the afternoon's debate in the Old Supreme Court chambers at the Capitol stretched well into the evening.
The bill, sponsored by Rep. Mark Ferrandino, D-Denver, would impose a 36-percent interest rate cap on an industry with close to 600 licensed payday lenders that regularly feature triple-digit rates.
"If you can't make money on 36 percent, then there's something wrong with the model," said Ferrandino.
Setting the stage for today's showdown were around 150 protesters, who rallied on the Capiol's west steps at noon to protest a plan that they worry will force loan store employees out of work and, in effect, eliminate an important credit option for citizens with nowhere else to turn.
"It's an attack on small business, it's a threat to our jobs, and it's an affront to Coloradans who are more than capable of making their own decisions about credit and personal finance," said Dave Gandera of Money Tree.
But, lurking on the edge of the protesters was a counter-protester dressed in a shark's suit to make the point that fast-cash lenders are really loan sharks who wouldn't be gouging borrowers with exorbitant interest rates if they were genuinely concerned with the economic well-being.
"We had a shark out here today because we feel they are loan sharking," said Carlos Valverde, a spokesman for a coalition of labor groups supporting the bill "They are preying on low-income communities with their triple-digit interest rates and all we want is reasonable reform. We're not trying to take anyone's jobs, we don't want to hurt anyone's business. We just want permanent reform."
Several similar bills that have been proposed in years past have been killed.
The bill now heads to the House floor, where it faces a tough vote with at least five and possibly as many as 10 Democratic representatives thought to be leaning towards joining Republicans in voting against it.
See Also: Banks Offering Payday Loans