State Representative Doyle Heffley said House Bill 2429 was not a payday loan bill.
“It’s not a payday loan; it’s more or less a linguistic adjustment, ”the Carbon County Republican said today. “It would just clarify the language so that current lending practices are not affected by different regulations. “
But, as to which lending practices would be affected – and by what regulations – Heffley couldn’t say immediately.
“Every time you go into this type of banking job it gets complex,” he said. “I don’t have all the information in front of me now. “
Despite this complexity, Heffley and other members of the House Commerce Committee had initially attempted to pass the legislation through the General Assembly without a public hearing. However, legal aid groups say there is a simple reason for this: HB2429 is, in fact, a payday loan bill – but government officials just don’t want to talk about it.
“Every year it’s just a new wrap on an abusive and expensive troubleshooting product,” said Kerry Smith, lawyer for the nonprofit Community Legal Services. “The program they are advocating this year (with HB2429) is to allow payday lenders to avoid the state’s interest rate cap by masquerading as brokers, by referring borrowers to lenders who are under the ceiling. Then the payday lender charges huge fees for this recommendation.
Heffley insists that Smith’s interpretation is wrong. However, he said he would keep the bill for an additional week to consider possible amendments that could address concerns from CLS and a coalition of other groups opposed to the bill, including the AFL- CIO, the Lutheran Palestinian Authority Defense Ministry and credit counselors. agencies like Clarifi.
Pennsylvania has some of the strongest wear protection in the country. Payday loan stores, a common sight in some states, cannot operate here due to a legal cap on the interest rates lenders can charge – which in some cases can skyrocket at- above 300%. Smith says that even though consumers with bad credit can access these loan products, eventually they get stuck repaying interest rates so high that it becomes virtually impossible to repay the principal.
But industry players, like storefront lender Check N Go and parent company AXCESS Financial, have pushed Keystone poles for years to weaken these regulations. Smith said the use of punitive referral fees was just a downstream money-raising method and would lead to the effective legalization of in-store payday loans.
Heffley acknowledges that he drafted the House bill after meeting with “bank” lobbyists, but declined to say exactly which clients they represented.
“I don’t know anyone in particular – just people from the committee… Everyone here has their own lobby, so they came and had meetings with us and their client,” he said. “I have also been against the lobbyists who are against the bill … There is no trick up the sleeve of anybody here.”
Heffley said he and Commerce President Rep. Brian Ellis were still working on amendments to address concerns that the bill would go too far in favor of payday lenders, in the hopes of ‘have a new language by tomorrow. He added that he and his wife were volunteering at a local homeless shelter and was sensitive to the risk toxic loan products pose to the needy.
“We need to educate people a lot more on how to better access their finances,” he said.
But Smith said the types of loan products processed by HB2429 would effectively legalize a financial trap for the same poor people the Heffleys help through charitable work.
“Charlie Hallanan has just been found guilty of making illegal loans and of trying to facilitate similar projects,” she said. Main Line millionaire convicted of racketeering related to payday loans out of state. “But this predatory industry keeps trying to find loopholes.”
City & State PA is one of 19 news organizations producing Broke in Philly, a collaborative reporting project on solutions to poverty and the city’s push for economic justice. Read more on https://brokeinphilly.org and follow us on twitter @BrokeInPhilly