FRANKFORT — State Rep. Darryl Owens, D-Louisville, introduced a bill Wednesday to curtail interest rates charged by payday lending companies.
House Speaker Greg Stumbo, D-Prestonsburg, said new data shows there may be a need for such legislation.
A state database established in 2009 shows that at least 83 percent of payday lending revenue was generated by borrowers with five or more transactions in 2010, Owens said.
He said the numbers confirm “disturbing trends” about the depth of debt caused by payday loans in Kentucky. The database tracked the number of loans given per person.
Owens’ measure, House Bill 182, would put a 36 percent cap on consumers’ rate for payday loans, as the U.S. Congress has done for members of the military. Seventeen states currently have such a law.
Representatives of the payday lending industry have previously opposed an interest rate cap. The industry offers a needed service for people that traditional banks won’t serve and keeps people from losing their homes and helps put food on the table, they have said.
John Rabenold of the Kentucky Deffered Deposit Association, a trade group, said the industry doesn’t need more regulation.
“It’s already well-regulated,” Rabenold said. Setting a 36 percent cap could hurt the industry and the 2,000 employees who work at the state’s check-cashing stores, Rabenold said.
Owens has filed this legislation in two previous legislative sessions, which last year had 21 co-sponsors but was not given a hearing in committee.
“Clearly, these numbers show that 400 percent payday loans are not a quick, short-time solution as they claim,” Owens said. “The information shows us exactly that these loans keep Kentuckians indebted for the long-term, collectively costing millions of dollars in fees that could otherwise be used to support their families’ and our state’s economic recovery. We must act on the clearly-painted picture now before us.”
Filed Under: KY General Assembly