House Passes Predatory Pay Day Lending Bill

Counting two late votes, the Pennsylvania House of Representatives voted 103 to 91 in favor of House Bill 2191, a measure that raises the cap on the annual interest rate for payday loans to 369%. There was bipartisan opposition to the bill with 19 Republicans joining Democrats to vote against the measure. Support for the measure was also bipartisan with 17 Democrats joining Republicans voting in favor.

This bill legalizes a form of predatory lending that traps many borrowers in a long-term cycle of debt. In states with similar laws, the typical borrower is indebted for more than 200 days a year, while payday lenders derive 60% of their revenue from borrowers with 12 or more loans annually.

The bill narrowly passed the House despite the objections of a broad coalition that includes the Council of Chapters of the Military Officers Association, Habitat for Humanity, AARP, credit counseling agencies, women's advocacy groups, and the AFL-CIO the Pennsylvania.

Those advocates urged the Pennsylvania Senate to reject the bill and protect Pennsylvania's families from a product designed to undermine household finances and increase bankruptcies in working and middle class rural and urban communities.

Below are links to this morning's news and editorial coverage:

The Philadelphia Daily News, like many of us, is puzzled as to what the majority in the House was thinking when it passed HB 2191. 

A BILL PASSED Wednesday in the state House and sent to the Senate shows just how warped the priorities of some of our lawmakers are: An amendment to the bill would prohibit payday lenders from locating too close to a horse-race track. Apparently, the bill's sponsor, Chris Ross, wants to protect the customers of one of the state's favorite-son industries — the industry that was the very reason for Harrisburg to legalize gambling — from the damaging effects of high-interest-rate predatory loans. Such lenders would also not be allowed in slots parlors.

So if you're partaking of state-sanctioned gambling, you're in good shape. The rest of us, not so much. By removing a 24 percent interest-rate cap on loans, Ross' bill would allow payday lenders into the state to prey on primarily low-income consumers who need a short-term loan, with outrageous interest rates that can exceed 400 percent annually. In case anyone thought otherwise, the financial meltdown of 2008, caused by strings of bad mortgage loans and questionable lending practices, has not halted predators or the lawmakers who love them...

Why Harrisburg is enabling these predators is a mystery; Ross himself, in an op-ed in the Harrisburg Patriot News, called payday loans dangerous and uncontrolled. The only true way to protect people against these predators is to keep them from practicing here. A small bright spot: Apparently, two dozen of the original sponsors of the bill changed their minds when they looked more closely into the terms. Gov. Corbett should do the same if this terrible bill reaches his desk.


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