Kentucky lawmakers who stood behind House Bill 182 are actually wallowing in the pain of defeat, reports the Louisville Courier-Journal. The proposed payday lending legislation was voted down 13 to 10 in the Kentucky House Banking and Insurance Committee. Military loans in the state will remain at a federally mandated 36 percent.
Keeping cash advance businesses open
Louisville Democrat Rep. Darryl Owens, who served as the sponsor of House Bill 182, compared the payday loans bill to a cooked piece of meat.
"It’s done. You can stick a fork in it," he said.
Despite numerous extant studies that illustrate that payday lending is much less expensive than comparable alternatives and that a legitimate, non-exploitative market for the product exists, Rep. Owens and others cling to the belief that payday loan interest rates are "obscene.". Surveys show that most users of pay day loans have enough income to repay the loan while it is uncommon for there to be defaults and rollovers even though some people who use payday advances really are out of financial shape.
Kentucky disagrees with Rep. Owens and company
Kentucky Deferred Deposit Action is a payday lending industry group that John Rabenold is in. He said that House Bill 182 would have been "a job killer". When loaning $100 with an Annual Percentage Rate of thirty-six %, not much would be earned. Only one dollar in profit is made. The "profit" is taken away totally after a payday advance business pays for operational and salary expenditures. In Kentucky, about 650 payday lending outlets would have to shut down. That means around 2,000 jobs would be lost. No politicians who plan to run for office again want that on their resumes.
Kentucky wants to keep payday loans available
Consumers whose access to traditional credit has been restricted because of credit history will inevitably experience financial shocks from time to time, particularly when emergency expenses arise. It might be for medical bills or automobile repairs. Either way, it is necessary to have quick cash from payday advances. The Courier-Journal reports that Democratic Rep. Jim Gooch thinks that families in Kentucky need access to the payday lending industry. He is worried that families would have nothing to do when an emergency arises.
Information from
Louisville Courier Journal
courier-journal.com/article/20110216/NEWS01/302160106/1010/FEATURES/House-panel-rejects-payday-loan-bill?odyssey=nav%7Chead
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