For the second time, the payday lending bill in the Idaho Legislature passed a committee hearing despite opposition from advocacy groups.
Dawn Juker spoke in opposition of the bill on behalf of Catholic Charities of Idaho. Juker said the bill didn't go far enough to protect borrowers who fall into a cycle of taking out payday loans. Juker said she'd rather have no bill instead of the bill in the Legislature.
"There's too many things the consumer would have to be responsible for — such as requesting an (extended payment plan) — that are not in the typical something payday lenders would market. I think it leaves too many holes open."
The House Commerce and Human Resources Committee sent the bill to the House with a do-pass recommendation. The bill, already passed in the Senate.
Rep. Neil Anderson, R-Blackfoot, said he supported the bill despite calls from representatives from Idaho Community Action Partnership and St. Vincent De Paul to place tougher regulations on payday lenders.
"There's two sides, and this bill seems to me to be an attempt to go somewhere in the middle of that road and at least get us started," Anderson said.
The bill limits the amount of a payday loan to 25 percent of the borrower's monthly income. It also caps the number of times a lender can try to redeem a bounced check at two, eliminating the possibility of racking up more fees.
The bill also allows a borrower who can't pay within the usual payday loan term of two weeks to request an extended payment plan. Such plans would allow borrowers to pay their debt in four payments over two months without incurring additional fees.
Frank Monasterio, who testified against the bill on behalf of St. Vincent De Paul, said he'd prefer legislation that was similar to the 36 percent interest rate that federal law mandates for members of the armed services.
"Payday lending restrictions should include usury limits, reasonable lending caps and loan terms that take into account a consumer's ability to repay," Monasterio said.
Trent Matson, director of government affairs for payday lending service Moneytree, said that his company and other large payday lenders already have policies in place matching the conditions established in the bill. He said he supported the bill because it would help reel in "unscrupulous lenders." in the payday loan industry.
"There's a common myth is the industry likes to give more and more loans and impose more and more fines and somehow make more and more money," Matson said. "This is an unsecured loan product."
Phylis King, D-Boise, was the only committee member voting against passing the bill.