Senators Ignore Data Showing Floridians In Trouble With Debt Trap
Loans, Vote to Legalize An Additional Triple-Digit Interest Product
Senator Jose Javier Rodriguez seemed to be the only member of the Senate Commerce and Tourism committee who heard the arguments and the outright pleas of consumer advocates and faith leaders Monday afternoon as they asked lawmakers to stop payday lenders from moving a new harmful bill to the full Senate.
SB 920, sponsored by Appropriations Chair Senator Bradley, would allow loans twice as large as the current limit, up to $1,000, with 60- to 90-day terms and annual interest rates over 200%. According to an analysis from the Florida Office of Financial Regulation, a borrower in debt for 60 days currently pays $110 in fees for $1,000, but would pay $214.68 under SB 920. And payday loans financially devastate borrowers because they are structured to keep them paying the triple-digit fees over months or years, whether they are short or longer-term loans.
A representative of Amscot, a large payday lender, testified that his company needs the new law because the federal Consumer Financial Protection Bureau released a new rule impacting his business. That rule would require payday lenders to assess the ability of borrowers to repay their loans, something most lenders already do. The rule is not scheduled to take effect until August of 2019, and it is under attack by members of Congress and the new director of the Consumer Bureau, so it may not ever be put into place.
While Senator Rodriguez cast the only “no” vote, one senator voted in favor of the bill despite his concerns about the high cost.
“I’m going to vote for it because I have enough faith in Senator Bradley moving forward that we’ll take some of these pitfalls out that are of great concern here today,” said Senator George Gainer. “Certainly 200-something percent APR is out of the question.”
Another committee member, Senator Audrey Gibson, offered a 36% cap on annual interest rates before withdrawing it based on her friendship with the bill sponsor, Senator Bradley.
The FL NAACP, the AARP, the Florida Catholic Conference, National Association of Latino Community Asset Builders, Florida Prosperity Partnership, Florida Veterans for Common Sense, the Cooperative Baptist Fellowship of Florida, UnidosUS, Florida Hispanic Unity, Florida Legal Services, League of Southeastern Credit Unions and many others are among the many groups who oppose legalizing a product that would snare borrowers in a debt trap even deeper and more damaging than traditional payday loans.
In a letter, civil rights attorney Benjamin Crump expressed opposition to the bill:
“Payday lending puts the burden of extremely high interest rates on people of extremely low means. And these loans offer no value but instead serve to systematically redistribute wealth from low-wealth communities to large, corporatized predatory lenders. And as with so many other issues, this is one that has a devastating impact to the fabric of Black and Latino communities… We cannot in good conscience let a sophisticated means of exploitation, especially one that can be resolved with such a simple solution, continue to destroy good and decent people. Florida lawmakers should reject this new product and instead pass a usury cap on payday loans – just as people across this state are asking them to do.”
Rev. James T. Golden, social action director of the AME Church in Florida, gave committee members an impassioned plea:
“The reality is that on a per annum basis, all of the products that have been produced for consideration by the legislature in Florida have triple-digit interest rates. While we debate this in the two hours that have been granted, there are people who have to live with this for six months, or for a year. And the reason we complain is that they live with this much longer than that because these products keep them in debt, keep them from being able to move beyond the sad state that they find themselves in….
…I find it very difficult to be sympathetic to multi-millionaires sitting in here saying to you, we need help, when you all know that the resources this preacher and I bring to bear on this situation doesn’t come with one campaign contribution. But it comes with a heartfelt plea to you to do the right thing by the people who couldn’t come here today. Do the right thing by the people who couldn’t lift their voices because they’ve been too busy paying off these loans they’ve gotten from the industry.