BATON ROUGE — Legislation backed by the national payday lending industry that would expand their operations in the state narrowly passed the Louisiana Senate by a vote of 20-17 on Tuesday. Predatory payday already lending drains more than $240 million each year from Louisiana workers by saddling vulnerable borrowers with high-interest loans that they often cannot afford. But instead of working to address this problem, the Senate has voted to make it worse.
Senate Bill 365 would expand predatory lending in Louisiana by allowing payday and car title lenders to issue “installment loans” with annual interest rates of up to 167 percent. The bill is being pushed by national predatory loan corporations as a way to evade new federal consumer protection regulations. Similar bills have already been rejected in several other states (Florida being the lone exception).
“We see too many people taken down the path of financial ruin by payday lenders in Louisiana already,” said Carmen Green, State Policy Fellow of the Louisiana Budget Project. “This bill should not even be on the table. We ask our lawmakers to stand with the hardworking people of our state and not the payday lending industry.”
Fourteen groups signed an open letter to Louisiana legislators urging their opposition to the bill, including the Louisiana NAACP, faith groups, and advocates for low-income families.
“Payday lenders will try to tell you our communities need these loans. We don’t. We need safe, responsible resources for people who are struggling to make it, not debt traps disguised as short-term relief, but actually confiscate big chunks of their customers’ wages over weeks, months and even years,” said Byron Sharper, President of the Baton Rouge chapter of the Louisiana NAACP. “SB 365 adds a new triple-digit interest cash-stripping mechanism to what we’ve already got in this state. It is absurd and will hit low-income people hard. Payday lenders are known to target communities of color in particular, so the NAACP has long opposed this predatory business model.”
The Louisiana Legislature should be looking to expand consumer protection rather greenlight an expansion of the predatory lending industry.
For more information about Senate Bill 365, click here.