Inclusiv is gearing up for its next fight to pass legislation in Louisiana that imposes caps on interest rates for payday loans.
State Rep. Edmond Jordan had introduced a bill that would have capped interest rates on payday loans at 36%. Sixteen other states and Washington, D.C., have already enacted similar legislation.
Last month, Jules Epstein-Hebert, program officer for the trade group, testified before the state’s House Commerce Committee in support of the legislation, arguing that payday lenders took advantage of loopholes in existing law to charge excessive fees.
“The loopholes in Louisiana’s Deferred Presentment and Small Loan Act encourage out-of-state actors to take advantage of the current permissiveness in this state,” Epstein-Hebert said during his testimony. “The majority of payday lenders in Louisiana are headquartered out of state, and Tennessee- and Texas-based payday lenders are currently charging Louisianans over 700% APR.”
Epstein-Hebert continued that Louisiana payday loans carry an average annual rate of almost 400% while running Louisanans $145 million in fees annually. Community development credit unions in Louisiana hold $3.5 billion in loans outstanding and compose $4.6 billion in assets under management, according to his testimony. The proposed legislation would have saved $2.2 billion annually, Epstein-Hebert testified.
Judy De Lucca, president and CEO of New Orleans Firemen’s Federal Credit Union, which is a member of Inclusiv, also testified in favor of the bill. The Louisiana Credit Union League attended the hearing to support the proposal.
Jordan, who also sits on the board of Essential Federal Credit Union, which is a member of Inclusiv, emphasized that the bill was not an attack on loan funds, but an effort to limit predatory lenders.
However, the bill met resistance from representatives of the loan fund industry who countered that many in the Louisiana region lacked alternative solutions to products currently being offered. The committee voted against the legislation 11-2.
This was not the first time the bill was introduced to the committee but Inclusiv was able to better mobilize and engage the state’s credit unions this time around, Epstein-Hebert said in an email. The trade group will work with its partners over the next few months to “lay the groundwork for a similar bill during the next legislative session.” They plan on working with Jordan again and will also take feedback from lawmakers into account.
“We see Louisiana as an important opportunity to push back against predatory lenders and we will continue to provide our members with new solutions for effectively meeting the needs of unbanked and underbanked Louisianans,” Epstein-Hebert said in an email.
