Last rites for payday loan bill

A bill that would tighten regulations on payday loans is dead, say its sponsors.

Senate President Peter Groff, D-Denver, a co-sponsor of House Bill 1310, said supporters pulled the plug on the legislation because of amendments added to the bill in the Senate that he said weakened the measure.

"It's dead," Groff said of the bill. "What we did in the Senate makes the process worse. We went to a situation where consumers were in a position of really being gutted by the industry."

Though the Senate had passed the bill, it was sent to the Senate Appropriations Committee. Groff said he decided not to push for the bill to make it out of committee with the amendments added.

In its original form, the bill would have capped interest rates on payday loans at 36 percent. But after arguments that the 36 percent limit would force many short-term lenders out of business, the Senate amended the bill to cap rates at 45 percent.

Critics of payday loans say that borrowers often pay in excess of 300 percent interest on loans, if the interest were applied to a full year. Short-term lenders say it's unfair to apply an annual percentage rate to payday loans that only last a few weeks _ though customers often renew the loans several times.

A coalition of advocates for the poor said the payday lending industry had hijacked the bill.

"The amendments are good for the industry, not the consumers," Rich Jones, director of policy and research at the Bell Policy Center, said in a statement. "House Bill 1310 intended to put back into the pockets of hardworking Coloradans the $75 million spent each year on excessive payday loan interest and fees."

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