Utah Passes Payday Loan Legislation

Written by David Schmidt. Posted in Legislation

Almost two years ago many Utah senate members were embroiled in a scandal that rocked the entire state and reverberated across the nation. A modest payday loan reform bill was stopped in the senate with tactics from many different payday lending interest groups, which led to the resignation of Attorney General John Swallow. Since then, the payday loan reform bill has gained steam and has aimed to make a change for many years.

Until recently, it was impossible to make changes due to the power of lobbying groups. Now the scandals of previous years have made it nearly impossible for interest groups to get in the way of passing legislation.

Utah Senate and Governor Legislation

So far, the Utah legislation has gone through the senate with flying colors. The specifics of the bill are modest, but they go a long way to protecting the individuals who have taken out payday loans and struggle to pay them back. Right now, the law is not as helpful for citizens who have payday loan debts, but the senate’s new bill is aiming to change all that.

The main reason it has passed so easily is due to the high majority of senators who fear retribution in the same way that scandal rocked politicians a few years ago. To avoid such scandals, many senators are convinced that passing the legislation will be a better idea.

The next step of the way is to have the governor of Utah sign the bill. Whether he does so or not will probably decide his fate in a number of ways. The lobbying groups for payday loan industries is typically very strong, but public opinion is doing a lot to sway the way these politicians are making their decisions.

Payday Loan Legislation Details

The details of the payday loan legislation in Utah are not that liberal. In fact, the bill only calls for borrowers to get time to pay off the loans without sanction or high interest rates. After 10 weeks of this high interest rate period, the legislators and politicians think that common folk need some type of break in order to release themselves from the cycle of debt.

The ironic senate vote this time around was 29 in favor and 0 against, which just shows how important public opinion can be in order to change a law. Most people know that there is a lot of power behind the payday loan companies and they want politicians to stand up to them in order to make the right decisions.

If politicians are going to be the representatives of the people, they have to listen to the people more than the companies that fund their campaigns and political ventures. It is important for states to make moves like this one in order to show the nation that payday loan legislation is not a forgone conclusion. Even if most people are cynical about the shape of the legislation today, it is possible to make a change with consistent effort towards a final goal.

Local Economies Suffer with Payday Loans

Written by David Schmidt. Posted in Legislation

Recent studies have started to show that local economies with heavy payday lending are suffering as a result. While it is difficult to lay the blame on payday lending (as there is a huge correlation between stagnating economies and payday lending), it is interesting to see how the city of Anniston, Alabama is interpreting the latest data. A recent study by the Insight for Community Economic Development has had some harsh things to say about the payday loan industry. This information has brought to light some of the bigger problems that people are having with the industry as a whole.

How Local Economies Suffer

The study released last March indicated that the payday lending companies cost the economy $744 million in 2011 and helped to lose more than 14,000 jobs. One would think that because they are so big they are actually helping the economy (by paying taxes) and even providing jobs (for clerks etc). It seems like neither of those things are happening and there are many different reasons why the local economies are suffering as a result.

The first and most important reason is because the payday loans reduce household spending. Interest rates are so high that people who want to pay them off simply don’t have any capabilities to do so. The vast majority of people who are dealing with the payday loan industry don’t want to spend money elsewhere because of the exorbitant interest rates that are applied to the loans.

This study indicates that these changing values and motivations are the cause of the local economy problems across the country. The study was conducted by a California based organization. That state is also trying to determine a solution for their payday lending problem, which has reached new heights. It is now the second worst state when it comes to lending.

Payday Lending and Legislation

Many states are recognizing the impacts that the payday loan industry is having on their small economies and they are focusing on changing the law to help the public cope. The vast majority of payday lenders are unable to handle the legislation that comes with local councils, but they have done a great job getting rid of legislation that impacts their ability to make money.

Most of the companies have spent a lot of money in order to lobby against legislation that would impact their ability to generate profits and revenue. Thankfully, the public opinion is changing so much that it is going to be hard for them to overturn it all.

The future of payday lending looks grim in some cases because of the public opinion. New legislation is passing every single day in small towns and even though the larger state legislative bills are unable to pass, it shows there is a public awareness. However, the payday lenders are consolidating more and becoming larger companies that are capable of fighting these legal limits on their activities. Only time will tell what will happen with the industry.

Will Louisiana Loan Capping Work?

Written by David Schmidt. Posted in Legislation

There are many different legislative procedures going on across the nation in the payday loan industry. Many of them are utilized to provide some type of regulation one way or another, but they are not all working as effectively as they should. Either way, this is part of the devolution process that is making the states more powerful and the Federal government less so. By giving states more power to decide over their own affairs, it is possible to use them as testing grounds for others.

In Louisiana, a new bill is being pushed to cap some of the costs for the industry. In Baton Rouge (the capital of Louisiana), a new bill has been started to begin the process of making payday loans less painful for those who are caught paying them all day. The biggest question for lawmakers inside and outside the state is whether or not the loan capping is going to work.

What is Loan Capping in Louisiana?

Right now there are many payday loan companies that charge extremely high rates on people that utilize their services. It makes sense for this to occur because of the free market prices of these collateral free loans. Nonetheless, it can be detrimental for the longevity of senior citizens and other people in the states of Louisiana and the rest of the nation.

On Monday they are seeking to make it impossible for payday loan companies to charge interest rates of anything higher than 36%. Most of the time the companies are able to charge individuals upwards of 100 or even 200% on their payday loans. This is something that has groups like AARP very concerned given the large number of elderly individuals who are getting into debt with these types of companies.

Some of the payday loan companies are fighting back as usual. Not only are they using lobbying groups to help them win support to crush the legislation, but they are outspoken about the events as well. For example, one public affairs vice president mentioned that the government is seeking a policy of “backdoor prohibition”. While most politicians, legislators and citizens will not agree with that, some people fear heavy restrictions on these types of companies.

There is a lot at stake with loan capping, which is why it is such a hot topic in the state of Louisiana and in the nation as a whole. If a company gets their loans capped, there is a good chance they might be unable to make the business work properly. The whole industry is based on few people repaying them back and therefore needing to charge very high rates to make up for it. How will capping effect their business?

Loan Capping Nationwide

Many people are concerned with the prospect of loan capping across the nation. It screams of regulations that can squeeze out a certain industry that does offer services to millions of people. Whether it has predatory practices or not, it is used as a way of helping people who are in need of cash without any credit.

It will be interesting to see what happens in the state of Louisiana. Considering there are so many different issues to the debate, it will be interesting to see if all parties can make it through such a predicament intact.

Idaho Payday Loan Bill

Written by David Schmidt. Posted in Legislation

Many bills pass through state and national legislators on a weekly basis, but few of them are as heavily contested as the recent Idaho contest in the house of representatives. The bill has many opponents, but it managed to pass 35 to 34 in the most recent contest.

The bill itself is an interesting piece of legislation that once again puts questions into play about the quality of payday lending in the United States. Each state is trying to deal with the payday loan industry in different ways and it is important to keep up the pressure to come up with something that benefits everyone involved.

Idaho’s Payday Loan Bill

The new payday loan bill does a few things for common people who are trying to get payday loans. First of all, it will limit the size and allows borrowers to get interest-free payment plans as well. There are many problems with the bill as many legislators have openly voiced. For one thing, having an interest free payment plan is wildly hard to regulate. Those who are able to receive them are not always accepted and many applicants that should be rejected are not.

Overall, there are also issues with the way that interest rates are capped with the bill. People who are trying to make a living running a payday loan company will have a much harder time making that happen with the new caps on the payday loan amounts. Making sure that there are no high fees will make it hard for payday lending companies to operate at all.

What This Means for States

This means a few things for the people who are trying to incorporate new laws into the state legislation. Most people who are trying to incorporate these laws across the country are looking to other states to see what might happen as a result. For states that are looking at Idaho, they are seeing how unfortunate it might be to have these caps as real laws.

The people are obviously crying for support when it comes to getting payday lending capped, but that doesn’t mean that everyone is so happy. Many people feel betrayed in the business world because a fundamental freedom has been taken away. Given the situation, it is easy to see how the effects might be felt in many states around Idaho and the nation as well.

States will be skeptical about all kinds of payday lending options, but there are few real choices in many cases. State legislation has not fully passed in Idaho, but the fact that the House has allowed this bill to pass may give some indication about the future of payday lending in the country.

As more people get into this type of debt, there are going to be higher regulations a well. Nonetheless, it is important to consider the different issues related to payday lending that might alter your own interest in getting this type of loan.

House Bill 239 Payday Loan Battle

Written by David Schmidt. Posted in Legislation

House Bill 239 LA payday loan billIn Louisiana and other states in the south, the battle between the public defenders and politicians / watch dog groups versus the payday loan industry has heated up. In recent months it seemed that there was no fight left in the payday loan industry. In many states the industry is endorsing bills that pass regulation in an effort to come to a consensus and prevent a wholesale change to their way of life. However, in the southern states, they sometimes have a kick of resistance left in them.

The most recent death of House Bill 239 from Representative Ted James of Baton Rouge has serious implications for the state of the payday loan industry in the south. Even if it is a strange victory in a sea of defeats, it is a victory that comes on the heels of a number of studies that should have swayed public opinion in the other way. One of the main reasons it has not is because the payday loan industry is finally using an argument that is true and works; so many people need payday loans in order to survive.

Poverty Stricken Payday Loans

In states like Louisiana, it is not hard to find poverty stricken neighborhoods and regions. Inner city Baton Rouge and New Orleans provides plenty of urban areas that are full of poverty while there are country towns and villages that don’t do much more than farm small plots of land. Both rural and industrial are struggling in Louisiana, which is the perfect recipe for taking out small loans when the emergencies hit.

Unfortunately, emergencies hit often and they lead to a payday loan debt trap, which can last for many months and even years. The average length of debt from a payday loan has reached six and a half months, which is definitely higher than the few weeks most often touted. The biggest problem for politicians is that the payday loan industry now has a valid point. In reality, many of the poor people in Louisiana would not be able to survive without the loans.

There is now a reason for the politicians to keep payday loans for the poorest people who are alive. Making them cheaper or restricting their ability to lend to people makes it harder for poor people to get money, which obviously grows the burden on the state. Many politicians would rather have the burden on these small private companies that make a lot of money if they are successful.

Treatment Changes and Payday Loans

A lot of politicians are coming out in favor of better treatment and conditions for those who are in payday loan debt, however. The vast majority of men and women who take out these loans get harassed on a regular basis from payday lenders, which is problematic for many reasons. If a new bill were to enter the House of Representatives in Louisiana, it should focus more on the role that politicians have to protect people from harassment and from violence rather than change their financial habits.

Changes in the South for Payday Legislation

Written by David Schmidt. Posted in Legislation

There are a lot of payday loan laws across the United States and even in similar countries like the United Kingdom. Looking at the different laws helps to see what has worked and what does not. In the example of drugs, Portugal was a famous country that decriminalized drugs altogether and found tremendous results. In the United States, looking at this drug law has made a huge difference in our own understanding of the problem.

When it comes to payday loans, a similar mentality can be taken. It is a good idea to look for the changes to the southern way of life to see whether or not it is useful to regulate the industry. However, it is important to look at the other legislation that has occurred in states nearby. When looking at the other states, one can clearly see that there is legislation that works well and regulation that has not led to much.

Arguments for Payday Regulation

There are many good arguments for payday loan regulation, but New York is not one of them. In this state, the payday loan industry has been removed completely from existence. No high fees and regulation is crippling to anyone in the industry. Still, the internet age has allowed many people to get into high rates of debt that they must pay off or face problems. Even though the New York state has prevented a lot of companies from operating in brick and mortar locations, the online payday loan companies are sucking money out of the state and it is impossible to make a change.

This is the kind of blanket regulation that is not only causing New York to lose out on revenue from taxes, but is also having the money sucked out and people are finding other ways of getting loans to stay alive. The human being is a very intelligent entity when backed into a corner. When people need money fast in order to survive, a state law will be unable to keep up with the methods used to acquire this money. It also pushes many people to underground loan sharks that can be violent despite breaking the law.

There are other arguments in favor of regulation, such as some of the caps of interest rates on payday loans. This allows people of low socio-economic status to get the money that they need in order to survive, but it limit how much they are going to be charged. States like Alabama and Mississippi have utilized this approach well in recent years.

Overall, there is a lot of room that the payday loan industry can make in order to impose their will, but public opinion is swaying in one direction only. The only thing that public opinion needs to do in order to make the right decisions is analyze what other states have done and find the best methods for them. Combining the best results will offer the best legislation and a continued experiment in this financial industry.


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