HB 444 Offers No Solutions

The Kentucky Coalition for Responsible Lending (of which the Kentucky Equal Justice Center is a part) is advocating for a 36% interest rate cap on payday loans.  A bill pending in the KY legislature – HB 444 – would create a database of information on payday lending, but would do nothing to address the real problem – the exorbitant cost of this type of lending.    There are some very troubling provisions in this bill, which will severely limit public access to information in the database and in state agency (Department of Financial Institutions – DFI) records on payday lending.  Here’s a summary:

· DFI may require the database provider (a contract company) to submit database information to DFI, but not to the legislature or to the public

· Info DFI may disclose to the public includes only a list of licensees or aggregate financial data concerning licensees and any orders of action taken against licensees

· Annual reports, reports of examinations of licensees and other papers in DFI’s records shall  be confidential and privileged, and not subject to KY’s Opens Records Act

· Annual reports, reports of examinations of licensees and other papers in DFI’s records shall not be subject to subpoena, and shall not be subject to discovery or admissible as evidence in any civil action unless a court determines that the DFI executive director would not be prejudiced

· Neither the DFI executive director or other DFI employees acting under his authority shall be required to testify in any civil action

The payday loan industry and some legislators claims that a database will give us the information we need to determine whether the payday loan industry needs to  be reformed.  How will this information help us if it is not available to the public?   The only thing that will fix this problem is to limit payday lenders to charging a reasonable rate of interest.   We expect a Senate floor amendment to be filed that will cap interest at 36% and we encourage all Senators to vote for this amendment.  Without this amendment, the Coalition for Responsible Lending cannot support HB 444.

Anne Marie Regan

Attorney at Law

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