INDIANAPOLIS, Ind. – An Indiana House committee passed a bill that would allow some lenders to charge interest rates on small loans that are higher than Indiana law currently allows.
The House Financial Institutions Committee voted along party lines, 7 to 3, to pass Senate Bill 613, sending the bill to the full House for consideration.
A 17-page amendment released about an hour before Tuesday’s hearing made some changes to some terms contained in the bill. But the changes did little to satisfy those who say the bill will mean financial ruin for some Hoosier families. A statewide coalition of groups representing veterans, clergy and others continued their opposition to the measure.
“Society is not going to be better off, these families aren’t going to be better off with high interest rates out there for these loans,” said Glenn Tebbe, Director of the Indiana Catholic Conference.
“I think they have violated their ethical responsibility to provide good care for the citizens,” said Mary Blackburn, a member of Indianapolis First Friends Meeting. “This is going to continue a cycle of debt and I think there are many other products at a community level that could help.”
Changes contained in the amendment included reducing interest rates on some of the loans that would be allowed. A 192 percent interest rate on a 6-to-36 month loan up to $4,000 would be reduced to 167 percent. A 99 percent interest rate on a 6-to-12 month loan up to $1,500 would be reduced to 72 percent. An up-front fee on such loans was reduced from $150 to $100.
“This is still unacceptable,” said Erin Macey, Policy Analyst at Indiana Institute for Working Families. “This is a massive expansion of payday and subprime lending in our state that’s going to be very damaging.”
Current Indiana law says interest rates above 72 percent on such loans are considered felony loan sharking.
During Tuesday’s hearing, Indianapolis Democrat Representative, Cary Hamilton expressed opposition to the measure.
“Moving forward with this bill will do more harm than good,” Hamilton said.
Republican Representative Matt Lehman, from Berne, presented the amendment to the committee. He and other supporters of the bill say it would give Hoosiers who need to borrow money better options than unregulated online lenders and payday lenders who charge interest rates far higher than the bill would allow.
“Trying to push people away from the payday loan at 341-percent interest, this simply gives them that option,” Lehman said. “And I would ask anybody who opposes it what’s the other solutions?”
The bill now moves to the full House for consideration. When it narrowly passed the Senate in late February, 26 to 23, some Republicans joined Democrats in voting against it.