Bill could allow payday lenders back into Pa.
Out-of-state payday lenders could get back into Pennsylvania through a bill introduced in the state House of Representatives that would make it legal for them to set up operations here.
The bill -- HB 2191 -- was introduced by Rep. Chris Ross, R-Chester, on March 14 and at this point is supported by more than 50 House co-sponsors, both Democrat and Republican. While the bill has consumer-friendly elements, at its core it would legalize a form of high-interest lending currently not allowed.
"We have heard they will try to pass it next month without debate," said Greg Simmons, a manager at Action Housing. The nonprofit financial literacy group based Downtown is opposed to the legislation and has joined a statewide campaign to defeat the bill.
This week, Diane Standaert, legislative counsel for the Center For Responsible Lending in Durham, N.C, is visiting Pennsylvania, meeting with nonprofits and other community groups to sound the alarm about the legislation and the risks of legalizing a practice that can trap low-income consumers in a vicious cycle of high-interest debt.
Mr. Ross could not be reached for comment Tuesday. In a memo sent to all House members earlier this year, he said he had introduced legislation on payday lending in the past but the Department of Banking has stood firm in its opposition.
"Unfortunately, it has become clear that the loans continue, but have gone onto the Internet, where they are impossible for us to regulate," he wrote.
A 2010 state Supreme Court decision ruled that out-of-state payday lenders must abide by the state's banking regulations even if they don't have a physical presence here, but many have found ways to make high-interest loans to state residents despite the rules.
This bill, Mr. Ross said in his memo, will incorporate "the strongest consumer protections available in other states that regulate the practice," including limits on size of loans; restrictions on fees and interest charged; up-front disclosures and limits on the number of loans outstanding to a customer; and limits on the ability to "roll over" loans.
To be sure, there are many consumers who use payday loans. But the government should protect seniors who could get trapped in a cycle of debt they can't
This decline is primarily due to reduced payday and installment loan volumes from unfavorable law changes effective January 1, 2010 in Washington and South