The mortgage crisis loomed large in most of the country’s statehouses, but it was not the only banking issue legislatures tackled this year.
State lawmakers continued to toughen payday lending and identity theft laws and acted to keep large retailers like Wal-Mart Stores Inc. and Home Depot from opening bank branches in their states after obtaining an industrial loan charter.
Oregon’s Legislature passed a measure to cap the annual interest rate to 36% for all consumer finance, payday, and title loans of $50,000 or less. Additionally, lenders there can charge only one origination fee of not more than $10 for each $100 of the loan amount.
Though the bill exempted depository institutions, the Oregon Bankers Association opposed it, because some of the state’s larger banks have consumer finance subsidiaries that make such loans, said Linda Navarro, the group’s president.
Since bill took effect in July a number of payday lenders have left Oregon, and state regulators are urging banks there to develop short-term, small-dollar loan products, Ms. Navarro said.
Montana passed a bill that, among other things, prohibits lenders from making additional payday loans to consumers who have outstanding loans.
The National Conference of State Legislators says 41 states and the District of Columbia now have laws to restrict payday lending.
State lawmakers continue to address identity theft and subsequent fraud by stiffening penalties for committing such crimes or by allowing for the creation of “passports” that let victims of ID theft obtain credit and guarantee that they will escape prosecution for crimes committed by the person who stole their identity.
For example, the Montana Legislature enacted a bill that allows any law enforcement agency in the state to issue an identity theft passport to a person who has filed a police report in Montana or any other state, citing that the person was a victim of identity theft.
All states and the District of Columbia have identity theft laws on their books.
Colorado, West Virginia, and Tennessee are among the states that passed laws this year to bar certain retailers from opening bank branches within their borders. Wal-Mart had reignited the debate by applying for a Utah ILC charter in 2005.
A number of states this year clarified laws that they passed in 2006 and that would have inadvertently banned all companies from opening an industrial bank branch in their state. Such statehouses amended the laws to ban any industrial loan company from branching on or near the site of a commercial affiliate.
Nineteen states now have such laws on their books.
