Payday loan database wins Alabama Senate committee’s approval

A statewide payday loan database moved one step closer to becoming a reality Tuesday when an Alabama Senate committee voted 6-0 for it. HB 145, sponsored by Rep. Patricia Todd, D-Birmingham, now moves to the full Senate, which could vote on the plan later this week. The House voted 93-1 for the bill last week.

Committee chairman Sen. Slade Blackwell, R-Mountain Brook, described the bill as “non-controversial.” Still, after a series of questions from Sen. Roger Bedford, D-Russellville, members of the Senate Banking and Insurance Committee amended the bill to require that the database be competitively bid.

The amendment could slow the bill down if it wins Senate approval. HB 145 would have to return to the House because the language no longer would be identical to the version the House passed. The House either could accept the Senate’s changes or send the bill to a conference committee to resolve the differences between the two versions.

HB 145 would not reduce the annual interest rate that payday lenders can charge in Alabama from the current 456 percent APR. But a common database would make it possible to enforce a current state law that prohibits borrowers from taking out more than $500 in payday loans at any one time. Without a single statewide database, many borrowers can hop from storefront to storefront and take out $500 payday loans from each, racking up thousands of dollars of debt. The database would alert lenders when a borrower already had reached the $500 cap and prevent them from extending additional loans to that borrower.

The state Banking Department last year proposed regulations to create a common database, but some lenders sued to block the plan, claiming the department lacked the authority to do so. Todd’s bill would require lenders to submit information annually to the department, which many advocates say would greatly improve available data about the industry.

Lawmakers will return Wednesday for the 26th of 30 allowable meeting days during the 2014 regular session, which is expected to last until early April.

By Stephen Stetson, policy analyst. Posted March 18, 2014.