Payday lending bill faces uncertain fate in Indiana Senate

INDIANAPOLIS (AP) - The Republican leader of the Indiana Senate says he is opposed to legislation to expand payday lending and allow for rates more than triple what is currently permitted under the state's criminal loansharking law.

"It's treading water and the water is pretty deep," Republican Senate leader David Long of Fort Wayne said Thursday, referring to a payday lending bill that narrowly passed the House last month and is now before the Senate. "... I'm not a big fan of it, personally."

It's a felony under state law to offer loans with an annual percentage rate greater than 72 percent, according to the Indiana Department of Financial Institutions. But the new payday lending bill would lift that, allowing payday lenders to charge annual percentage rates as high as 222 percent on short-term loans between $605 and $1,500, an analysis by Indiana Institute for Working Families found.

Many payday loans are for two weeks, but the bill would create a new class of loan that would be paid off over the course of three months to a full year.

Long's comments come amid a chorus of faith-based groups announcing their opposition to the bill, including leaders of the church attended by House Speaker Brian Bosma, who voted for the measure. The bill cleared the House in January on a closer-than-usual vote of 53-41.

A cross-denominational group of 13 clergy members - including Indianapolis Archbishop Charles C. Thompson - wrote in a letter this month that it "opens doors for lending practices that are unjust and which take unfair advantage of people in desperate circumstances."

Other opponents include social service charities and the state's four largest veterans' organizations, who say such high-cost loans trap people in debt and prey on the poor.

"The optics of it aren't very good, to be honest," Long said.

Republican Sen. Mark Messmer of Jasper, who is carrying the bill in the Senate, is working on amendments that may make the bill more palatable to members of the Senate Commerce and Technology committee.

Long said changes that would eliminate some of the fees could help earn support, but he still wasn't sure "it will get enough votes to get out of the committee." Still, he anticipates that the bill will be brought up for a vote.

Payday lenders argue the proposal would serve people who need quick cash but have nowhere else to go, filling a void.

"We always think more options are good for customers," said Jamie Fulmer, a spokesman for Advance America, one of the country's largest payday lenders. He said the bill would create a regulated environment that is transparent and beneficial to small-dollar borrowers.

Critics, however, say the proposal lacks consumer protections, especially now that President Donald Trump's administration is looking to scrap rules created under former President Barack Obama aimed at tightening loan practices.

"These high-cost loans have devastating consequences for borrowers," said Steve Hoffman, president and CEO of Brightpoint, a Fort Wayne-based non-profit that provides social services to low-income people.

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