By Don Gowen
A coalition of over 150 Alabama organizations under the banner of The Alliance for Responsible Lending in Alabama, along with the Governor, Superintendent of the Alabama State Banking Department, and a bi- partisan group of Alabama legislators from both the House and Senate, came together at the start of the 2013 Regular Session of the Alabama Legislature to address the issue of predatory payday and title pawn lending in the state. Currently, consumers pay triple-digit rates for car title and payday loans (including those offered at traditional storefronts, oneline, and by banks).
A large body of research has demonstrated that these lending products are structured to create a long-term debt trap that drains consumers’ bank accounts and their ability to sustain their families. Indeed, the lack of underwriting, high fees (300% – 468%), short term loan limits (10 day and 30 day), single balloon payments, and access to the borrower’s checking account as collateral, or the threat to repossess the borrower’s only means of transportation to go to work or church, ensures that most borrowers have no choice but to take out additional loans to pay off the original payday or car title loan. These predatory lenders can undermine state statues and regulations by exporting their weak home-state limits (and Alabama is one of those states) on credit costs across state lines as subsidiaries of banks or by Internet marketing.
After extensive research and development, the coalition under The Alliance for Responsible Lending in Alabama introduced HB320 in the House and SB282 in the Senate for payday loan reform and HB462 and SB331 in the Senate for title pawn lending reform. HB320 and HB462 were referred to the House Financial Services Committee for review, consideration, and favorable report to the floor of the House for vote.
However, on March 7, 2013, HB421 written by and for the TITLE PAWN INDUSTRY as “smoke and mirrors” for title pawn lending reform was introduced by Representative Lesley Vance and Co-Sponsored by Representatives Greer, Sanderford, Bridges, Buskey, Robinson (O), Johnson (R), Hurst, Long and McClammy. HB421 does nothing to reform title pawn lending and is a farce. One must ask one’s self WHY would duly elected representatives of citizens of their District be supporting predatory lending practices in the Alabama Legislature?
But it did not take long to find out that HB421 was greased on the skids by the lobbyists for the payday and title pawn industries. On the very next working day of House Financial Services Committee, HB421 was brought up and passed out of Committee with a favorable vote of all in attendance, except one Representative. WOW! One of the swiftest bill processing in the Alabama Legislature in years, but with every high-paid lobbyist in the state supporting HB421, the citizens of the state did not stand a chance. A representative of the predatory lender stated “I think the bill we currently have is something that works well for the industry.”
Remember the Representatives that introduced and sponsored the title pawn industry bill HB421. Well most of them served on the House Financial Services Committee that voted approval for HB421 in Committee hearing: Representatives Steve Clouse, Lesley Vance, Marcel Black (voted NO), DuWayne Bridge, Mack Butler, Steve Hurst, West Long, Thad McClammy, and Oliver Robinson. How can you fail when the predatory lending lobby had stuffed the vote in Committee?
But on April 10th, 2013, the Alabama House Financial Services Committee held hearing on HB320 (Payday Loan Lending Reform) (introduced and referred to the Committee on February 21, 2013) sponsored by the Alliance for responsible Lending in Alabama, the Governor, and Superintendent of Banks, and (5) bi- partisan Representatives, – and HB462 (Title Pawn Lending Reform) (introduced March 20, 2013 – original bill introduced 02-21-13) sponsored by the Alliance, the Governor, the Superintendent, and (and 28 bi-partisan Representatives).
House Financial Services Committee Chairman Steve Clouse was absent from Committee which was Chaired by Representative Lesley Vance who had introduced the title pawn bill – HB421 and got it passed favorably out of Committee on March 13, 2013. After approximately (10) individuals testified before the Committee in support of HB320 (Payday Loan Lending Reform) and HB462 (Title Loan Lending Reform), and Lobbyist Jerry Spencer and a spokesman for Borrow Smart Alabama (a payday loan organization) made a couple of “spin” comments, Co-Chair Vance made the announcement (without taking a vote – the decision had been made before the hearing started) that the Committee was carrying over the bills for more study by the Committee’s Subcommittee – the same Representatives that had access to the bills for weeks and had just conducted a hearing before the general public. With standing room only by the highest paid lobbyists in Alabama supporting the title pawn and payday loan industries, Co-Chair Vance made the statement “Let’s take the bill that’s been passed out [HB421 – the industry bill] – and Representative Scott’s bill (HB462 – Title Loan Lending Reform Bill), and let’s make it one bill to protect consumer”. To enhance their legacy of service to the consumers of Alabama, all the Committee had to do was to pass out of Committee HB320 and HB462 for floor votes in the House but instead they sold their soul to the predatory payday loan lobby. Not what should be expected of our elected representatives and a SHAME! The consumers of Alabama lost another one to predatory lenders.