Oklahoma Gov. Mary Fallin vetoed legislation Friday that would have expanded high-cost consumer lending in the Sooner State.
The veto was not a surprise because Fallin, a Republican, torpedoed similar legislation four years ago. Still, it was a setback for the payday lending industry, which attracted strong support for the measure in the Oklahoma Legislature.
The legislation would have allowed consumer lenders to offer installment loans of up to 12 months at interest rates far higher than they can charge now, while leaving unchanged the rules for shorter-term payday loans. Oklahoma currently allows payday lenders to charge customers $45 on two-week loans of $300.
Consumer advocates say that the Oklahoma legislation is part of a multistate push by the payday industry aimed at minimizing the impact of a federal crackdown, if and when that happens.
The Consumer Financial Protection Bureau has proposed rules that would make it difficult for payday lenders in any state to offer the short-term loans that have long been the industry’s staple. Bills similar to the Oklahoma legislation have been introduced this year in several states.
In a veto message signed Friday, Fallin expressed concern about how frequently low-income Oklahoma families turn to high-cost loans.
“Currently, Oklahoma law limits borrowers to a loan of $1,000.00 from pay day loan institutions,” Fallin stated. “This bill would allow a borrower to receive a loan for an additional $1,500.00, thus stacking their liabilities for repayment on these high interest loans.”
Fallin urged the state Legislature, if it revisits the issue, to seek advice from her office, as well as from consumer advocates and mainstream financial institutions.
The legislation can still be enacted if two-thirds of the members of both legislative chambers vote to override the governor’s veto. In earlier votes, the legislation fell just short of the two-thirds threshold, passing the Oklahoma House 59-31 and the state Senate by a 28-16 margin.