House committee OKs bill on payday lenders
Already unanimously voted through the Senate, SB16 received a unanimous vote Wednesday from the House Business and Labor Committee.
The bill establishes administrative fines for failing to register or renew a registration or if a registrant files "materially false information." Speakers Tuesday said more payday-lender bills will be coming down the legislative pike this session, but they offered support for SB16, sponsored by Senate Minority Assistant Whip Ed Mayne, D-West Valley.
Mayne said the bill enhances consumer protection and gives the department more regulation in dealing with the payday-lending and check-cashing industry.
Edward Leary, commissioner of financial institutions, described the bill as "a delicate balance" between industry and consumers. Regarding the fines incorporated in the bill, he said the department was looking for "something between the power of persuasion and taking a license away to do business. There are very few sanctions in-between."
Wendy Gibson, spokeswoman for the Utah Consumer Lending Association, voiced "overwhelming support" for SB16, saying the association supports efforts to "crack down on wayward lenders."
Laura Polacheck of AARP Utah also spoke in support of the bill but said other legislation should provide "something that would do a little bit more to make the loan products more affordable and more fair to the consumer." She said capping loan amounts might not pass in Utah, but suggested perhaps extending the times for loans to be paid off.
Like Leary, Mayne called the bill "delicately balanced."
"We've got some consumer groups that would like it to go further, and despite the smile on the industry, they're really kind of pained also on this thing. ... We're going further with (the) consumer, which to me is the most important thing. ... If there's other bills to be filed, and the debate on caps and others, that's fine, but we cannot turn our backs on the consumers and not have this bill passed."
While Gibson presented statistics indicating the need for the industry in Utah, Polacheck painted a different picture, saying the Department of Defense has recognized that the industry "traps people into debt." Polacheck said many people simply repay interest repeatedly and never get to the principal, "which keeps them in debt."
Leary said his office gets few complaints about the industry.
"From the people who use the service, I would say no," he told the committee. "That's been one of the ironies of it. While it has more attention, the people who actually use the service are not complaining to us. ... I have to assume that people, based on the number of complaints we receive, ... understand what they're paying for what they're getting."
E-mail: bwallace@desnews.com
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