Amid a deluge of lobbying from national payday lending operations, the Legislature in both chambers has shown a reluctance to tighten the sky-high interest rates and fees paid by customers of the short-term loan outlets.
But there remains a sensible reform that can be adopted, and it is before the Senate. We urge lawmakers to strengthen and adopt a version of Senate Bill 84 by Sen. Ben Nevers, D-Bogalusa.
It would limit the number of payday loans that can be taken out in a calendar year, a reform that has been adopted by a number of other states.
The creation of a cycle of endlessly renewed payday loans means that hapless consumers pay huge amounts on initial loans of $300 or less. The payday loan outlets have an exemption in the law not allowed for credit unions and state-chartered banks. They are only allowed 6 loans a year for a customer.
As is, Nevers’ bill limits the loans to 10 — but it seems that if six is the number for other institutions, the same should apply to the payday outlets that are ubiquitous in poor neighborhoods.
The clergy and community activists of Together Louisiana have called the current set-up a “debt trap” for unwary and often desperate borrowers. Other financial institutions are regulated to avoid those traps. Regulation should be avoided unless it is needed, but if it is applied, a level playing field in business is something that should be a goal of legislators.