Ana Ceballos
A House panel on Wednesday adopted a “strike-all” amendment to a bill that would change regulatory requirements governing the payday-lending industry, which consumer advocates criticize for creating “debt traps” for poor Floridians.
The proposal would comply with new federal rules set last year by the Consumer Financial Protection Bureau last year meant to ensure lenders determine if a borrower can afford to repay the full amount with interest.
State Rep. Jamie Grant, a Tampa Republican, said his bill would move to a “product that does not require the underwriting that makes the economics of the transaction unsustainable.”
Under his bill, a consumer may not borrow or have an outstanding balance that exceeds $1,000. And the maximum fees that a lender may charge cannot be more than 8 percent of the borrower’s outstanding balance on a biweekly basis.
It is expected, however, that the bill will raise the fees consumers must pay in some instances.
In Florida, there are 923 licensed short-term lenders. Between July 2016 and June 2017, these non-bank cash advance services approved $3 billion in loans to consumers with fees totaling $306 million.
Consumer and civil rights groups — including the NAACP, the Florida Alliance of Consumer Protection, the Florida Credit Union Association and Florida Legal Services — have long opposed these services, which they argue are a trap for poor Floridians.
State Rep. Janet Cruz, a Democrat co-sponsoring the bill, defended the effort, saying she grew up with a family that didn’t have access to credit cards. She shared that her mother, Gracie, used short-term loans to provide for her family.
“Being poor or financially challenged doesn’t mean that you are dumb,” Cruz said.
Following an hour-long debate on the bill, Grant admitted he is “conflicted” by the bill and that it is not a bill he would pass if “he was king.”
“The reason why this bill is striking a chord with all of us in this body is because we simultaneously understand that there are people in this state who don’t have access to traditional capital who have legitimate needs — urgent needs,” Grant said.
Rep. Sean Shaw voted in favor of the measure, saying he has constituents in “the most economically depressed part of Tampa” that rely on these short-term loans.
“If they were to go away, I would tell you that cable bills would not be paid, electricity would be turned off, cellphone and water bills (would go unpaid) — and that’s not something I am prepared to do,” Shaw said.
Former Congressman Kendrick Meek and former House Speaker Tom Feeney, who in 2001 helped pass the payday loan law to include protections intended to help cash-strapped Floridians, both spoke out in favor of the proposed legislation.
Feeney said the new federal rules will result in a significant reduction in credit availability and that Florida “needs to avoid this problem.”
“The Florida model for short-term, small-dollar loans has worked for our citizens, and I encourage state lawmakers to consider protecting this important credit option to keep it available for years to come,” Feeney said.
HB 857 now heads to its last committee stop and an identical version of bill, SB 920, is moving ahead in the Senate.
