Payday advance liberation: Kentucky House Bill 182 does not pass

Kentucky House Bill 182, which would have set a permanent payday lending rate cap at 36 percent Annual Percentage Rate, fell in a vote Friday, reports the Louisville Courier-Journal. The state House Banking and Insurance Committee set it down in defeat by a narrow 13-10 margin. Army loans in the state will remain at a federally mandated thirty-six percent.

Payday cash advance businesses will remain open

Louisville Democrat Rep. Darryl Owens, who served as the sponsor of House Bill 182, compared the pay day loans bill to a cooked piece of meat.

"It’s done. You can stick a fork in it," he said.

Payday lending has been shown in numerous extant studies to be less costly than alternatives. Still, Rep. Owens believes the payday loans rates of interest are too "obscene" to stay that way. While it may be true that many people who use payday loans are in difficult financial straits, industry surveys indicate that not only do most users have sufficient income to repay their loans in a timely fashion, but defaults and rollovers are rare.

Keeping jobs more essential for Kentucky

House Bill 182 would have been "a job killer," said John Rabenold of the Kentucky Deferred Deposit Association, a payday lending industry group. When loaning $100 with an Annual Percentage Rate of thirty-six %, not much would be earned. Only one dollar in profit is made. The payday advance business then has to pay for operational and salary expenditures. That means most "profit" disappears entirely. In Kentucky, about 650 payday lending outlets would have to shut down. That means around 2,000 jobs would be lost. That is something politicians might never be able to admit to having done.

Payday loans a needed service in Kentucky

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. Payday loans are needed whether it’s for medical bills or car repairs. Democratic Rep. Jim Gooch told the Courier-Journal that he feared lack of access would leave Kentucky families without access to money during just such an emergency.

Articles cited

Louisville Courier Journal

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