[Update] Why is Sen. McCoy standing in way of payday lending bill?

Senator McCoy has a choice:

  • Keep $36 million a year in usurious fees in Iowan’s pockets and in our local economy
OR
  • defend 400% interest rates and continue to strip wealth from our communities.

In a sit down meeting with CCI members, Senate Commerce Committee Chair Sen. Matt McCoy (D-Des Moines) stated he has no intention of considering Senate File 388, a bill to cap interest rates for payday loans at 36%.  (Updates to this post can be found below.)

 

Join other members today and tell Sen. McCoy that it’s time to crack down on payday lending in Iowa.

 

We met with Sen. McCoy to share a new national report on payday loans, “Profiting from Poverty: How Payday Lenders Strip Wealth from the Working Poor for Record Profits“. The report details that $36 million is stripped annually from Iowans alone. That is $36 million that could be put back into our economy locally and create jobs.

But, what we found out was none of this seemed to matter to Senator McCoy. Despite the fact that our bill to cap payday loan interest rates at 36% APR passed the Human Resources committee and has bipartisan support in the Commerce committee, Senator McCoy stated again he has no intention of considering the bill in his committee.

Update 1/30/12 – Debunking McCoy’s online excuse:

Responding to dozens of emails from CCI members urging him to move this bill, McCoy said he was concerned that it wouldn’t cover online loans. “Computer generated loans, like Iowa payday loans are not capped and provide for high interest rates for short-term loans to consumers. Until a Federal reform of payday lenders passes the United States Congress, any effort to cap Iowa lenders will not work.”

 

Our response:The availability of online loans at interest rates above 400% shouldn’t stop Iowa lawmakers from capping interest rates within our state. We checked with the Iowa Attorney General’s office and our friends at the Center for Responsible Lending and, in fact, our bill already addresses much of this problem for two simple reasons:

  1. Any payday lender doing business in Iowa must abide by the state’s usury laws.  For example, online lenders like Ace Cash Express cannot offer a resident of New York (where interest rates are currently capped) a payday loan exceeding 36% APR.
  2. Any online payday lender that flaunts the law and would still offer a triple digit interest rate loan to an Iowan would find that the terms of their loan are unenforceable.

Now is the time for Senator McCoy to understand this fact as well and bring our bill up for debate.

Update 2/7/12 – McCoy changes his tune – now will he act?:

Responding to your phone calls and emails, Senator McCoy is taking another look at our bill, Senate File 388. The question still remains, will he do the right thing and bring this bill forward to his committee?

 

Senator McCoy stated that he is hesitant to move a bill in the Senate if it won’t pass in the House.  Our response is simple – do what is right and let us worry about the House.  After all, there was bipartisan support in the House in 2007 to pass interest rate caps on car title loans; why not payday loans?

What we know about payday loans:

  • 7 out of 10 Iowans want their elected officials to crack down on payday lending.
  • Payday loans strip $36 million annually from Iowans, targeting struggling Iowans and trapping them in a cycle of debt.
  • 17 states already cap interest rates on payday loans at or below 36%.
  • The Iowa legislature has done it before. A bi-partisan effort in 2007 capped interest rates on car title loans. It’s time to do the same with pay day loans.
  • There is bi-partisan support on the Senate Commerce Committee to pass Senate File 388 – a bill designed to cap interest rates on payday loans at 36% – on to the floor of the Senate for debate.

 Help us turn up the heat on Senator McCoy and stand up for the Iowa you want to see.

Send Sen. McCoy a quick email urging him allow Senate File 388 to come up in his committee for a vote. This bill deserves to be debated on the Senate floor.

 


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