By Bill Britt
Alabama Political Reporter
Just as the Trump administration’s acting head of the Consumer Financial Protection Bureau is working to repeal federal restrictions imposed on payday loans under the Obama administration, certain Alabama Republicans aligned with left-leaning special interests are once again pushing to regulate the industry further.
In a year when Republican Speaker of the House Mac McCutcheon and Senate President Pro Tem. Del Marsh have called for no controversial legislation, left-leaning groups are prepared to fight for more restrictions on payday borrowing.
For the 2018 session, one of these groups has hired lobbyist, Darby “Heather” Coleman-Davis, to push their renewed agenda. Coleman says the group will be calling for more modest regulations, but industry insiders say it is just another attempt to kill off payday lending one cut at a time.
Sen. Arthur Orr, R-Decatur, has been a reliable champion for the left-leaning organizations that continue to challenge storefront lending through Obama-era regulation. Orr is currently proposing yet another round of new legislation on small lenders. Given his position as the Senate ETF chair, few openly challenge his decidedly Democratic view on small loans.
Coleman-Davis says her group is not going for a big win but is looking for a few seemingly harmless changes to payday borrowing. This was much the same promise as last year when a compromise bill was killed by the very groups she says now want a smaller change.
Lawmakers during the 2017 legislative session tried in vain to offer a compromise bill on lending reform, but the Southern Poverty Law Center and Alabama Arise backed a filibuster in the Senate that doomed the reform package. State Rep. Danny Garrett, R-Trussville, who last session worked to bring about, what he considered, meaningful reform to payday lending said at the time, “I don’t understand that type of thinking,” in an interview with the Alabama Political Reporter. “To kill a bill because you can’t have everything you want doesn’t make sense, because we, as Legislators, have to work in the real world of what’s possible.”
Payday lending services are currently used by nearly one in every 11 low-and-moderate-income wage earners in Alabama. The special interest lobbyist says they have filled two type-written pages with the names of individuals, groups and organizations who want to help these borrowers by reforming payday lending. However, the list of so-called reformers doesn’t include the tens of thousands of working Alabamians who take out small-dollar loans due to limited access to traditional lines of credit.
Polling shows that most people who use such alternative financial resources are happy with the products they’re offered. Even under the Obama administration, the CFPB’s “Tell Your Story” portal received 12,308 comments praising the payday lenders, with fewer than 240 customer comments – less than two percent – being negative. Of the 240 negative comments, 84 comments were mistakenly categorized as payday lending and were actually complaints about banks, insurance complaints and student loan complaints. Dubiously, these results were hidden by the CFPB until a Freedom of Information Request pried it loose from those who wanted to keep it from public review.
Alabama has made positive reforms over the last several years which have caused the number of storefront operations to shrink dramatically. But every year, those who would place additional regulations on payday borrowing come back to the legislature wanting another bite at the apple; an apple payday lenders see as laced with a business-killing dose of arsenic by way of mommy-state lawmakers.
Coleman-Davis says that five big-city mayors are signees on her list of supporters. APR has asked for a copy of the names as well as how much information these mayors receive before putting their name to the effort.
Last year, Republican lawmakers were misled by the anti-payday activists who claimed old reports in APR showed that the Alabama Federation of Republican Women were pushing for legislation that would have buried small lenders. Were those who signed the list fully informed of what they were endorsing?
Generally, Republicans are loath to embrace the business crippling Dodd-Frank Act and the CFPB, which was created by liberal torchbearer Massachusetts Sen. Elizabeth Warren. However, in Alabama, those who support these types of regulation have the ear of several Republican legislators.
Meanwhile in Washington, conservative lawmakers and President Donald Trump are working to roll back business crushing regulations.
Senate Banking and Finance Chair Republican Slade Blackwell says he’s hoping to avoiding the controversy which will accompany a payday regulation bill. “Leadership has asked for a session that addresses the most serious issues that we face,” said Blackwell. “Any attempt to address payday or title lending would serve as a major distraction which we all hope to avoid.” While Blackwell did not decisively say any such bills would be DOA, he did express his concerns over such proposals. “These are complex matters, that take time to consider,” he said. “To achieve intelligent, positive reforms we simply need more time.”
Last year’s payday lending fight remains a bitter memory for some lawmakers and others wary of another battle to determine the fate of payday borrowing.
Blackwell said the legislature would be wise to see what the president and U.S. Congress have in mind before rushing into another squabble in the State House.