The Journal Gazette
Saturday, March 09, 2019 1:00 am

Furthermore ...

Bill on lending could make things worse

Lawmakers who support expanding the payday-lending concept subscribe to the belief they are helping families meet unexpected expenses. Those who work with Indiana's poor say the payday system, which allows repeated, short-term loans at an interest rate equivalent to 391 percent annually, can drive the working poor further and further into debt.

Last month, faith groups, social-service organizations and consumer and veterans' advocates finally got a committee hearing on a bill that would curtail such exploitive loans.

But the same day Senate Bill 104 was narrowly defeated on the Senate floor, another measure more to the liking of high-interest lenders narrowly passed. Co-authored by Sen. Andy Zay, R-Huntington and unveiled to horrified consumer advocates only the previous afternoon, SB 613 not only would do almost nothing to improve existing payday loans, it would create a new category of high-interest loans and raise interest rates on other loan categories dramatically.

A policy brief on SB 613 by the National Consumer Law Center and the Center for Responsible Lending says the measure “creates a labyrinth of debt trap loans in Indiana's financial landscape, making it nearly impossible for Hoosiers to escape from high-cost debt.”

The brief notes the loans the bill would authorize cannot legally be made to active-duty members of the military because the federal Military Lending Act limits such loans to an annual 36 percent interest rate -- the same rate SB 104 would have set for payday products. “While these loans are considered too dangerous to make to active-duty soldiers,” the brief asserts, “if SB 613 becomes law, high-cost lenders would be able to make them to Indiana's veterans and any other Hoosier.”

The bill awaits a hearing in the House Committee on Financial Institutions.

So the next time that your legislator tells you how compassionately they serve the less fortunate, how proudly they support our veterans and how they revere hardworking Hoosiers, ask them how they voted on payday-lending issues this session.

Contact your legislators

For state representatives


For state senators


Mailing address

200 W. Washington St., Indianapolis, IN 46204

Sign up for our daily headlines newsletter

Top headlines are sent daily

Share this article