New restrictions on payday lending in Louisiana failed to win passage in the state's Senate as industry lobbyists argued the proposals would shutter the storefront lenders.
The measure in the Senate would have limited borrowers to 10 payday loans per year and would have required payday lenders to enter transactions into a database for the Office of Financial Institutions to monitor. A similar measure had failed in a Louisiana House committee earlier in April. House Bill 239 sought to cap the annual fees charged for payday loans at 36% interest as the annual percentage rate sometimes can top 400%..
Proponents for more payday-loan regulation argued that the short-term loans come with high fees that cause a debt trap for the working class.
Senators voted 20-17 for the proposal by Sen. Ben Nevers, D-Bogalusa. But because the bill contained a new cap on fees, the measure needed 26 votes, two-thirds support in the 39-member Senate.
Senators expressed concern not only over the database, but also language aimed at capping the number of loans a borrower could take out. Sen. A.G. Crowe, R-Slidell, suggested a cap on fees would work better than telling borrowers how many loans they needed.
So, Nevers offered the amendment to put the bill back in its original form, with a cap of 36% on the annual interest rate for payday loans. But the amendment failed as well, 17-18.
In Missouri earlier this week, the Missouri House passed payday-loan legislation to eliminate renewals on payday loans and lower the amount of interest borrowers can charge.
That bill not only eliminates renewals but also caps the amount in interest and fees at $35. It further allows a borrower to sign up for additional time to pay back a loan without penalty. Missouri House members voted 112-39 on Tuesday to send the bill to the Senate, where a different version passed earlier. Lawmakers must agree on an identical measure by May 16.
Several states in recent months have passed or considered payday loan legislation. One of most recent involved a payday lending reform bill in Utah that the state's Senate approved. That legislation is under review by Utah Gov. Gary Herbert.