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Marsh substitute seeks to further enrich predatory lenders

By Bill Britt
Alabama Political Reporter

MONTGOMERY— President Pro Tem Del Marsh (R-Anniston) received favorable ink recently when he introduced Senate Bill 449. The bill was touted as a reform effort for payday lending in Alabama. Advocates against predatory lending considered it a first step toward curtaining the excessive fees charged by payday and title loan lenders.

However, on Tuesday, Marsh set to introduce a substitute to SB449 that favored the payday lenders and gutted his promised reforms. Once the Alabama Political Reporter released the facts concerning Marsh’s substitute, an immediate pushback took place against the substitute to SB449. Marsh’s chief of staff, Phillip Bryan, who is the self-proclaimed protector and enforcer for Marsh, Inc, launched into damage control. But once exposed the substitute could not find the needed votes to bring it to the floor.

Originally Marsh had said that SB449, would prohibit borrowers from taking out more than six loans per year. But the substitute would have increased this to 12 times within a year. This is even beyond what the Payday lenders had requested in committee.
 If an individual borrows $350 and rolls it over 12 times (as most borrowers only take out “new loans” to extend the repayment period), they will pay over $700 in fees alone. 
The bill first proposed by Marsh would have capped at fees at 12.5 percent or around 300 percent APR. The substitute would have kept fees at the current 17.5 percent of the amount borrowed about 456 percent APR.

When Marsh introduced the original SB449 State Banking Superintendent John Harrison was quoted in AL.COM as saying, “Consumers will be ‘well-served’ by the legislation.” Harrison is also quoted as saying, “If not for Senator Marsh’s renewed interest in reforming this industry, yet another year would have passed without any action.” 
The only item of Marsh’s original bill that remains constant is the requirement for a universal database under the purview of the Banking Department. 

Marsh is one of the wealthiest men in the Alabama legislature. He is the owner of multiple business including Southern States Bank. He even owns a private 1500-acre, $1.7 million island in the river in Lauderdale County, TN. It is said that Marsh has spent considerable time and an abundance of money to build a luxury “hunting” facility on his private island. So, it is not hard to imagine that Marsh doesn’t exactly understand the difficulty of those who seek payday loans just to make ends meet.

Another millionaire legislator is Speaker of the House Mike Hubbard, who recently took thousands of dollars from a title loan group to form his new “Storm PAC.” Select Resource Management, of Georgia, is a major player in the title lending business, racking in millions in profit from the working poor of Alabama.

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But all around the state there is a growing group of advocates who believe that the excessive fees charged by these lenders violates our state’s Judeo-Christian values. Usury has become a rallying cry for conservatives who believe that payday lending and title loans are doing damage to the state’s neediest.
Yet, this session alone hundreds of thousands of dollars have been paid by wealthy lobbyist to make sure that fees for the industry stay at around 400 percent APR. And that the cycle of borrowing continues to mean endless debt for the consumer and huge profits for the lenders.

At a recent hearing on title lending, the lobbyists outnumbered all others present at the packed committee meeting. Meanwhile 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, according to Don Gowen, an advocate. Advocates who would like to see reform to the predatory lending practices in Alabama were shocked when the found out that Marsh was preparing to betray them.

“Payday lending reform was originally introduced this session by Senator Keahey. The bill enjoyed broad, bipartisan support. When Senator Marsh introduced his version, we endorsed it, even though it only lowered the interest rate slightly. As originally filed SB449 was a solid compromise that still included strong consumer protections. This new substitution seems to look nothing like either bill, and we do not support it,” said Shay Farley, Legal Director at Alabama Appleseed Center for Law and Justice.

Don Gowen in a recent opinion column was not so diplomatic saying, “[Certain House members] have sold their soul to the predatory payday loan lobby”

It is not clear if Marsh’s enforcer, Bryan, has mustered the votes for the substitute to SB449 but in this case money doesn’t just talk it demands.

Bill Britt is editor-in-chief at the Alabama Political Reporter and host of The Voice of Alabama Politics. You can email him at [email protected] or follow him on Twitter.



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