Public Service Commissioner Foster Campbell, the state’s second-longest-serving official and an early supporter of Gov. John Bel Edwards, wrote to the governor on Friday asking him to veto the loan legislation. payday that sat on his desk for the past week.
“The last thing Louisiana needs to fight its ranking as the second-highest state in poverty is payday loan stores luring more low-income people into high-risk, high-fee loans. that they can’t pay back,” Campbell wrote to his fellow Democrat. “As evidence published against the bill shows, there are borrower-friendly options that don’t come with predatory terms like a 36% interest rate and a monthly ‘maintenance fee’ of 13% of the original loan amount.”
The state’s current payday loan system allows lenders to offer a loan of up to $350, due on the borrower’s next payday. The maximum a payday lender can make per loan is $55.
Senate Bill 381 does not replace or reform this system. Instead, it creates a new product.
Lenders offering the new product described in SB381 would make most of their money from a monthly “maintenance fee” worth up to 13% of the original loan amount.
For a loan of $1,500, these costs would amount to $195 per month.
Edwards staff did not immediately respond to request for comment on Campbell’s veto request.
Campbell, of Bossier Parish, was first elected as a state senator in 1976. In 2003, he joined the Public Service Commission and still serves on the Public Utilities Regulatory Board, representing a district with voters more than a member of Congress. Campbell ran unsuccessfully statewide as a Democrat for governor in 2007 and for the U.S. Senate in 2016. He was also an early supporter of Edwards.
Is a $1,500 loan worth it if it costs you $1,500 more in interest and fees?
Sponsored by Sen. Rick Ward III, R-Port Allen, SB381 left the Senate on April 19 on a vote of 20 to 14, just enough to pass. State Sen. Gary Smith, whose wife, Katherine Smith, is a registered lobbyist for one of the companies backing the legislation, was the only Democrat in that initial vote to support the measure.
Smith he and his wife did not discuss the bill. Payday lenders are the “one place some people have to go to get a loan. They can’t go to a bank. They can’t go to a credit union,” he said.
A bipartisan milieu was on both sides of the final 54-35 vote in the House on May 10.
Four Democratic senators voted with a 23-13 majority in the final vote on the measure that sent the legislation to the governor. Six Republicans voted no in that final vote on May 16.
Louisiana Democratic Party Chair Katie Bernhardt said the party has not met to take a formal position on the legislation. But Democrats generally oppose payday loans.
House Democratic Caucus Chairman Sam Jenkins, D-Shreveport, said Friday that Democratic lawmakers have yet to meet. “It will be something we huddle on,” he added.