Bill Summary for Bill Number HB10-1351

Date: 03/08/2010

Final
BILL SUMMARY for HB10-1351

HOUSE COMMITTEE ON JUDICIARY

Votes: View-->	Action Taken:
Adopt prepared amendment L.001 (Attachment G). Th Refer House Bill 10-1351, as amended, to the Commi Refer House Bill 10-1351, as amended, to the Commi	PASS FAIL PASS

02:31 PM -- House Bill 10-1351

Representative Levy explained the process by which the committee would proceed with testimony. She briefly recessed the committee to wait for the bill sponsor.

02:39 PM

The committee came back to order. Representative Ferrandino, prime sponsor, presented House Bill 10-1351 concerning the maximum authorized interest rate for a payday loan. Under current law, a lender may levy a finance charge on each deferred deposit loan (payday loan) that may be up to 20 percent of the first $300 plus 7.5 percent of any amount in excess of $300. This bill refers a question to the voters at the November 2010 general election to limit the finance charge to a maximum annual percentage rate of 36 percent.

Payday loans are limited by law to $500 or less, and are due to the lender on the consumer's next payday, typically in two weeks. The typical annual percentage rate on a two-week $500 payday loan, at the maximum $75 finance charge, is 391 percent. In 1998, 303,462 Colorado residents obtained 1,534,976 payday loans from the state's 610 licensed lenders. Over $566 million in loans were made during 2008. The average payday loan was $369, with a 317 percent average annual percentage rate.

02:44 PM

Representative Ferrandino responded to questions from the committee about the average length of a payday loan. The committee discussed the possibility of payday lending stores going out of business if the bill is enacted. The committee discussed the need for payday loans in Colorado and other types of loans that can be obtained. A lengthy discussion about the payday lending industry in Colorado ensued.

03:08 PM -- Laura Udis, Colorado Attorney General's Office, testified about the bill. Ms. Udis provided background information about the payday lending industry in Colorado. She discussed court cases related to payday lending. She spoke to the specific procedures for securing payday loans. She talked about the practice of securing multiple loans at one time. Ms. Udis responded to numerous questions from the committee.

03:35 PM -- Mercy Salazar, Colorado Progressive Coalition, spoke in support of the bill. Ms. Salazar discussed her personal experience with payday loans. She responded to questions from the committee.

03:46 PM -- Joseph Salazar, representing himself, spoke in support of the bill. Mr. Salazar spoke to the ways payday loans harm the Latino community. He talked about the fact that payday lenders are concentrated in low-income and minority neighborhoods.

03:50 PM -- Kasie Oliver, representing herself, spoke in support of the bill. Ms. Oliver discussed her personal experience with payday loans.

03:54 PM -- Shannon Masden, Colorado Progressive Coalition, spoke in support of the bill. Ms. Masden spoke on behalf of Portia Barnes. She discussed Ms. Barnes' experience with payday loans.

03:57 PM -- Toby Serrano, representing himself, spoke in support of the bill. Mr. Serrano discussed his personal experience with payday loans.

04:00 PM -- Cheyenne Hughes, representing himself, spoke in support of the bill. Mr. Hughes discussed his personal experience with payday loans.

04:03 PM -- Nicole Hurt, representing herself, spoke in support of the bill. Ms. Hurt related the story of her friend Ramon, who took out payday loans.

04:08 PM -- Rich Jones, The Bell Policy Center, spoke in support of the bill. Mr. Jones distributed written testimony (Attachment C) and read from his prepared remarks. He responded to questions from the committee.

04:27 PM -- Chad Gentry, Community Credit Counseling, spoke in support of the bill. Mr. Gentry discussed his experience counseling individuals in debt who have secured payday loans.

04:30 PM -- Reverend Bill Kirton, Interfaith Alliance of Colorado, spoke in support of the bill. Rev. Kirton stated that the bill is a moral imperative. He discussed the immorality of usury and indicated that payday loans are a form of usury. He related a story from the New Testament of the Bible about moneychangers. Rev. Kirton responded to questions from the committee.

04:40 PM -- Jennifer Kraska, Colorado Catholic Conference, spoke in support of the bill.

04:45 PM -- Reverend Deacon Becky Jones, Episcopal Diocese, spoke in support of the bill. Rev. Jones expressed her opinion that, more often than not, payday loans do more harm than good. She discussed various faith-based reasons for supporting the bill.

04:49 PM -- A.J. Clemmons, Women's Foundation of Colorado, spoke in support of the bill. Ms. Clemmons distributed a letter of support from the Colorado Women's Bar Association (Attachment D). She discussed the fact that payday lending companies disproportionately affect women in negative ways. She talked about the corporate policies and practices of payday lending companies. Ms. Clemmons responded to questions from the committee.

04:54 PM -- Renee Beauregard, Consumers United Association, spoke in support of the bill. Ms. Beauregard distributed written testimony (Attachment E) and read from her prepared remarks.

04:58 PM -- Brad Wood, All Families Deserve a Chance Coalition, spoke in support of the bill.

05:00 PM -- Bridget Kaminetsky, 9 to 5: National Organization of Working Women, spoke in support of the bill. Ms. Kaminetsky discussed the difficulties experienced by women with payday lending.

05:03 PM -- Chaer Robert, Women's Lobby of Colorado, stated that voters should be permitted to decide appropriate interest rates for payday loans. Ms. Roberts responded to questions from the committee.

05:05 PM -- Stefka Fanchi, Habitat for Humanity, testified in support of reforms for the payday lending industry in Colorado. She discussed the qualifications individuals must meet to qualify for a home through Habitat for Humanity, and the effect of payday loans on applicants' credit histories.

05:08 PM -- John Stoffel, Senior Lobby, testified that seniors are also subject to the lending practices of payday lenders. Mr. Stoffel responded to questions from the committee.

05:10 PM -- Chuck Humphrey, representing himself, spoke to his support for past legislation that allowed for repayment in installments.

05:11 PM -- Stephanie Bell, Project WISE, read the testimony of Lindsay Smith regarding Ms. Smith's experiences with payday loans.

05:14 PM -- Katie Pague, Northern Colorado Consumer Credit Counselor, testified regarding her clients' use of payday loans. She responded to questions from the committee.

05:18 PM -- Aimee Randall, representing herself, described her experience working with high-risk clients at a large financial institution.

05:21 PM -- Corrine Fowler, Colorado Progressive Coalition, testified that payday loans are detrimental to Colorado families. She discussed the number of individuals who are accessing payday loans. She responded to questions from the committee regarding the locations of payday lenders in cities in Colorado and the ownership of payday lending operations in Colorado.

05:28 PM -- Jessie Ulibarri, Mi Familia Vota and the Colorado Progressive Coalition, testified in support of the bill. Mr. Ulibarri discussed the negative effects of payday lending on the Latino community.

05:31 PM -- Estevan Flores, Latin American Research and Service Agency, and Jean Lucero, Colorado Latino Coalition, spoke in support of the bill. Mr. Flores and Mr. Lucero spoke about the bill from the perspective of the Latino community.

05:45 PM -- Amber Tafoya, representing herself, spoke in support of the bill. Ms. Tafoya discussed the effect of payday lending on military servicemen and servicewomen. Active duty service members may borrow payday loans at a capped rate of 36 percent, but that cap is eliminated for veterans who are no longer in the service.

05:48 PM -- Stacy Stolen, representing herself, spoke in opposition to the bill. Ms. Stolen discussed her experience with payday loans. She responded to questions from the committee.

05:53 PM -- Lynn DeVault, Community Financial Services Association and Check Into Cash, spoke in opposition to the bill. Ms. DeVault discussed existing laws that govern the fees charged by payday lenders. She spoke to policies and practices of the payday lending industry. She spoke about states that have capped the fees on payday loans and indicated that capping the rate in Colorado will put all payday lending companies out of business. Ms. DeVault responded to questions from the committee.

06:06 PM -- Deisi Pinedo, Advance America Cash Advance, spoke in opposition to the bill. Ms. Pinedo related details of her experience working for a payday lender.

06:11 PM -- Tamra Ward, Denver Metro Chamber of Commerce and the Colorado Competitive Council, spoke in opposition to the bill. Ms. Ward stated that financial services makes up one of the important clusters of the Denver economy. She expressed concern that passage of the bill could lead to 1,600 unemployed individuals in Denver. She spoke to the fact that payday lenders act as a lender of last resort for many people in need. Finally, she opposes the idea of regulating businesses through a ballot measure. Ms. Ward responded to questions from the committee.

06:22 PM -- Henry Sobanet, Colorado Strategies, spoke in opposition to the bill. Mr. Sobanet discussed academic studies on the subject of the economic effects of multiple payday lending companies closing at the same time. He stated his opinion that this would be the direct result of the bill's passage. Mr. Sobanet responded to questions from the committee.

06:37 PM -- Everett Martinez, representing himself, spoke in opposition to the bill. Mr. Martinez distributed a copy of one of his banking statements (Attachment F). He discussed his experience with payday loans.

06:41 PM -- Bob Moody, National Association of Industrial and Office Properties (NAIOP) Colorado, spoke in opposition to the bill. Mr. Moody discussed the economic impact of the bill from the perspective of commercial real property owners who rent to payday lending companies. He stated that the bill will have a dramatic impact on the commercial real estate industry during a very tough economic time. Mr. Moody responded to questions from the committee.

06:44 PM -- Mark Thomson, Moneytree, Inc., spoke in opposition to the bill. Mr. Thomson addressed various comments made by previous witnesses. He spoke to the number of people who use payday lending and how often people use the service. Mr. Thomson responded to questions from the committee.

06:56 PM -- Ron Rockvam, Colorado Financial Service Centers Association, spoke in opposition to the bill. Mr. Rockvam is an independent payday lender. He discussed his opinion that the bill is designed to eliminate payday lending businesses from Colorado. He spoke to the fact that there are very few consumer complaints against payday lenders and if there was a problem, the consumers would speak out against such practices. He stated that all five of his stores would be forced to close if this legislation is enacted. Mr. Rockvam responded to questions from the committee.

07:08 PM -- Gabriel McDay, representing himself, spoke in opposition to the bill. Mr. McDay discussed his experience working for a payday lender and as a user of payday loans.

07:12 PM

Representative Ferrandino wrapped up his presentation of the bill and asked for a favorable recommendation. Representative Court distributed prepared amendment L.001 (Attachment G).


BILL:	HB10-1351
TIME:	07:14:51 PM
MOVED:	Court
MOTION:	Adopt prepared amendment L.001 (Attachment G). The amendment strikes the portion of the bill that refers it to the voters. Representative Ferrandino explained his reasons for making it a referred measure. The motion passed on a vote of 7-4.
SECONDED:	Levy
		VOTE
	Court	Yes
	Gardner B.	No
	Kagan	Yes
	King S.	No
	Miklosi	Yes
	Nikkel	No
	Pace	Yes
	Ryden	Yes
	Waller	No
	McCann	Yes
	Levy	Yes

Not Final YES: 7 NO: 4 EXC: 0 ABS: 0 FINAL ACTION: PASS


BILL:	HB10-1351
TIME:	07:18:22 PM
MOVED:	King S.
MOTION:	Refer House Bill 10-1351, as amended, to the Committee on Appropriations. Members of the committee commented about the motion. The motion failed 4-7.
SECONDED:	Gardner B.
		VOTE
	Court	No
	Gardner B.	Yes
	Kagan	No
	King S.	Yes
	Miklosi	No
	Nikkel	Yes
	Pace	No
	Ryden	No
	Waller	Yes
	McCann	No
	Levy	No

Not Final YES: 4 NO: 7 EXC: 0 ABS: 0 FINAL ACTION: FAIL


BILL:	HB10-1351
TIME:	07:21:48 PM
MOVED:	Levy
MOTION:	Refer House Bill 10-1351, as amended, to the Committee of the Whole with a favorable recommendation. The motion passed on a vote of 7-4.
SECONDED:	Kagan
		VOTE
	Court	Yes
	Gardner B.	No
	Kagan	Yes
	King S.	No
	Miklosi	Yes
	Nikkel	No
	Pace	Yes
	Ryden	Yes
	Waller	No
	McCann	Yes
	Levy	Yes

Final YES: 7 NO: 4 EXC: 0 ABS: 0 FINAL ACTION: PASS