Nearly three in four Alabamians support a strict 36% interest rate cap on payday loans. But public sentiment wasn’t enough Wednesday to convince a state Senate committee to approve even a modest new consumer protection.
The Senate Banking and Insurance Committee voted 8-6 against SB 58, also known as the 30 Days to Pay bill. This proposal, sponsored by Sen. Arthur Orr, R-Decatur, would give borrowers 30 days to repay payday loans. That would be an increase from as few as 10 days under current state law.
The annual percentage rate (APR) for a two-week payday loan in Alabama can climb as high as 456%. Orr’s plan would cut the APR by about half and put payday loans on a cycle similar to other bills. This wouldn’t be comprehensive payday lending reform, but it would make life better for thousands of Alabamians.
About one in four payday borrowers in our state take out more than 12 loans per year. These repeat borrowers pay nearly half of all payday loan fees assessed across Alabama. The 30 Days to Pay plan would give these households a little breathing room to avoid spiraling into deep debt.
None of those facts stopped a majority of Banking and Insurance Committee members from kneecapping SB 58. The committee canceled a planned public hearing without advance notice, even though people drove from as far away as Huntsville to testify in support. Then the committee rejected the bill on a day when Orr was unavailable to speak on its behalf. Sen. Tom Butler, R-Madison, did an admirable job of presenting in Orr’s place.
The ‘no’ vote and what’s next for payday lending reform
Here’s how the committee voted on SB 58:
Sen. Chris Elliott, R-Fairhope
Sen. Steve Livingston, R-Scottsboro
Sen. Randy Price, R-Opelika
Sen. Clay Scofield, R-Guntersville
Sen. Shay Shelnutt, R-Trussville (chairman)
Sen. Bobby Singleton, D-Greensboro
Sen. Tom Whatley, R-Auburn
Sen. Jack Williams, R-Wilmer (vice chairman)
Sen. David Burkette, D-Montgomery
Sen. Donnie Chesteen, R-Geneva
Sen. Andrew Jones, R-Centre
Sen. Dan Roberts, R-Mountain Brook
Sen. Rodger Smitherman, D-Birmingham
Sen. Jabo Waggoner, R-Vestavia Hills
Alabamians should be able to rely on legislators to protect their interests and implement policies reflecting their values and priorities. Sadly, the Banking and Insurance Committee failed in those duties Wednesday. But one disappointing vote didn’t change the need for meaningful protections for Alabama borrowers. And it won’t stop Alabama Arise’s work to make that happen. We’ll continue to build pressure for payday lending reform in communities across the state.
In the meantime, we’re pleased to see bipartisan support in Congress for meaningful change at the federal level. The Veterans and Consumers Fair Credit Act (HR 5050) would set a nationwide 36% rate cap on payday loans. That would allow all Americans to benefit from protections already in place for active-duty military members and their families. And it would ensure a short-term loan wouldn’t become a sentence to months or years of deep debt.